By Gabriel Burin
BUENOS AIRES (Reuters) – The Mexican peso is set to trade relatively stable in coming months even as U.S. President Donald Trump escalates his use of tariffs, including a fresh barrage to be announced on Wednesday, a Reuters poll showed.
After collapsing nearly 23% in 2024, the peso is up 1.8% year-to-date, supported by Mexican President Claudia Sheinbaum’s recent success in negotiations to moderate Trump’s initial tariff push.
In six months, the local currency is forecast to drop marginally 0.4% to 20.55 per U.S. dollar from 20.46 on Monday, according to the median estimate of 26 foreign exchange specialists polled March 27-April 1.
Many forecasts were based on the assumption that any new tariffs on Mexican products would be limited in scope and short-lived, with the Mexican and U.S. governments eventually reaching middle ground again on trade issues.
However, Christian Admin de la Huerta Avila, an economist at Finamex, said “an announcement implying a significant deterioration in the trade outlook could put additional pressure on the exchange rate.”
Trump will announce reciprocal tariff rates on what he has called “Liberation Day” on April 2, after implementing levies on aluminium, steel and automobiles, along with increased tariffs on all goods from China.
For now, the only carve-out for Mexico and Canada would be to deduct the value of any U.S. content from the 25% tariffs on vehicles and parts.
Mexican officials have sought “preferential treatment” in the new trade scheme. Still, there are no indications the U.S. will honor previously established protections in the U.S.-Mexico-Canada Agreement.
“A lot will also depend on Mexico’s government response … there is a probability of retaliation by Mexico and that could increase the temporary volatility of the peso,” said James Salazar, deputy director of analysis at CIBanco.
For the 12-month period, the peso is seen shedding 1.6% to 20.80 per U.S. dollar, according to the consensus view in the survey.
Meanwhile, Brazil warned last week that global trade was at risk of being “weaponised” and World Trade Organization strains were likely to worsen before dissipating.
Brazil’s high interest rates are expected to at least partially shield the currency. The real is forecast to weaken 3.6% to 5.91 per U.S. dollar in 12 months from 5.70 on Monday.
The central bank’s tightening campaign to cool inflation is still not over, a Brazilian policymaker signaled this week. The Selic benchmark rate stands at 14.25%, above Mexico’s key rate at 9.00%.
“Brazil is in a cycle of monetary contraction, resulting in a growing interest rate differential with the United States,” analysts at 4intelligence consultancy wrote.
“This may help counterbalance fiscal problems, leading to relative stability in the USD/BRL exchange rate over the coming year.”
So far in 2025, the real has gained 8.4%, recovering from a selloff at the end of last year driven by investor worries about the feasibility of Brazil’s fiscal adjustment plans.
(Other stories from the April Reuters foreign exchange poll)
(Reporting and polling by Gabriel Burin in Buenos Aires; additional polling by Mumal Rathore and Anant Chandak in Bengaluru; Editing by Joe Bavier)
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