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The Mexican Standoff

The Peso fell as much as 1.4% against the dollar during Thursday’s U.S. session. Suggestions that the Trump administration might support a 20% tax on imports from countries with which the U.S. runs a trade deficit, such as Mexico, also affected the currency.

Raising the possibility of a tax is enough to undermine the peso, said Sean Callow, a foreign-exchange strategist at Westpac. “It looks like official relations between the two are at the lowest in many, many years.”

The WSJ Dollar Index, which measures the greenback against a basket of 16 currencies, was up 0.2% in recent Asian trading.

Pressure on the peso came amid renewed tension between the U.S. and Mexico. Mexican President Enrique Peña Nieto cancelled a meeting scheduled with Mr. Trump next week after tweets that Mexico would have to pay for the wall.

More than the wall, any 20% tax on Mexican imports would severely hurt its economy, said Stephen Innes, head trader for the Asia-Pacific region at forex broker Oanda.


Image – MXN Peso Mexican Peso BoM Bank of Mexico

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The Mexican Standoff


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