The Mexican peso is in suspense over the possibility that Donald Trump will impose a 25 percent tariff on Mexico and Canada starting February 1, which could drive the exchange rate up to 23 units, according to experts. The U.S. president stated that Mexico has not taken measures against the flow of fentanyl into his country nor reduced the arrival of migrants at the border, highlighting uncertainty in the market.
In this context, Valerie Ho, portfolio manager at DoubleLine Capital, pointed out that volatility will continue to affect the Mexican peso in the short term, considering that tariffs could be multilateral and prolonged in their implementation, which would create a challenging scenario for the Mexican currency.
The Bloomberg Dollar Spot Index recorded a weekly increase of almost 1 percent, boosted by Trump's commitment to impose tariffs on U.S. trading partners. Goldman Sachs strategists warned that sharp movements of the dollar could occur if tariffs are implemented, which would significantly affect the market.
The uncertainty surrounding Trump's tariffs has caused turbulence in financial markets, with the Mexican peso and the Canadian dollar being negatively impacted. The Mexican peso has fallen by more than 2 percent, while the Canadian dollar is experiencing its worst monthly streak in over eight years.
In this tense context, Noel Dixon, macroeconomic strategist at State Street, mentioned that the Canadian dollar could be reflecting most of the bad news in its current price, although the situation remains uncertain. Markets are awaiting the implementation of the tariffs and the response of the affected countries to this measure.
