Mexican peso and stock market dip as China tariffs spark fears of global recession

The Mexican peso wobbled and the nation’s banal marketplace speech plunged aboriginal Friday aft China announced retaliatory tariffs against the United States, fanning fears of a planetary recession.

Markets astir the satellite plunged for a 2nd time aft Beijing escalated a commercialized warfare ignited by U.S. President Donald Trump’s sweeping “reciprocal tariffs” which were made nationalist connected Wednesday.

As banal markets astir the satellite tumbled, the Bolsa Mexicana de Valores was nary exception. (File photo)

In mid-morning trading Friday, Citibanamex reported that the peso was trading astatine 20.99 to the US dollar astatine slope windows, importantly weaker than its 19.94 opening value.

After dipping to 19.91 aboriginal on, by 2 p.m. Friday the spot complaint for the Mexican peso had recovered to 20.46. At the aforesaid time, the main scale of the Mexican Stock Exchange had mislaid 5.18%.

Before its Friday instability, the peso started the week strong. After Mexico was near disconnected Trump’s planetary tariffs list, announced Wednesday afternoon, the peso gained worth against the dollar connected Thursday.

While planetary markets tumbled, the peso appreciated to little than 20 pesos to the dollar for the archetypal clip since mid-March,as investors speculated that Mexico had emerged comparatively unscathed, according to the quality bureau Reuters.

Christian Admin de la Huerta, an economist astatine Finamex, was little sanguine, however, telling Reuters earlier this week that “an announcement implying a important deterioration successful the commercialized outlook could enactment further unit connected the speech rate.”

China’s retaliatory onslaught — punitive 34% tariffs connected each goods imported from the U.S. — served arsenic that announcement, and planetary markets again went into a tailspin. The peso did not flight the effects.

“The peso depreciated owing to hazard aversion arsenic determination is simply a higher probability of planetary recession owed to Trump’s tariff policies,” Gabriela Siller, manager of economical investigation astatine Banco Base, told paper El Financiero.

Friday’s merchandise of a stronger-than-expected U.S. jobs study — 228,000 jobs added successful March — further weakened the peso against the U.S. dollar.

A volatile script for Mexico’s currency

Earlier successful the week, Reuters forecast that the peso would acquisition a unchangeable trading situation done the summer. This was invited quality due to the fact that Mexico’s currency was battered successful 2024, dropping astir 23% implicit the people of the year.

As Mexican President Claudia Sheinbaum negotiated mean presumption successful Trump’s archetypal tariff pushes successful January and February, the peso recovered, rising 1.8% done Monday.

Constant changes to U.S. tariff policies this twelvemonth person sent the peso connected a chaotic ride. (Graciela López Herrera/Cuartoscuro)

But it has been a roller-coaster ride. On Feb. 2, the peso depreciated to 21.30 earlier Trump paused a 25% tariff connected each Mexican imports.

The peso steadily strengthened done mid-March, hovering astir the 20-to-1 people until Trump threatened to enforce a 25% tariff connected imports of Mexican automobiles, weakening the currency by 1% to 20.30 connected March 27.

The peso depreciated modestly past week, opening Monday astatine 20.46. On Tuesday, Reuters reported that overseas speech specials projected that the section currency would depreciate marginally 0.4% to 20.55.

But that was earlier China roiled markets, and concern slope J.P. Morgan stated that it foresees a 60% accidental of a planetary recession by year-end, up from 40% previously.

With reports from El Financiero, El Economista and Reuters