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.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.