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The Mexican peso weakened beyond 17.8 per dollar on Tuesday, hitting a seven-week low and heading for its worst weekly performance since June 2024, after an unexpected drop in US non-farm payrolls deepened concerns about an economic slowdown in Mexico’s largest trading partner. Although the dollar index eased following the loss of 92,000 US jobs and an increase in the US unemployment rate to 4.4%, the peso remained under heavy pressure amid a broader flight from riskier emerging-market assets.
This vulnerability is being intensified by the escalating US–Israeli confrontation with Iran, which has triggered energy price shocks and heightened the risk of a global inflationary recession. While Mexico’s fourth-quarter GDP data showed some resilience, a record USD 6.48 billion trade deficit combined with stubbornly high core inflation has left the peso without a meaningful cushion. As geopolitical instability rises and US demand cools, threatening Mexico’s export outlook, investors are increasingly turning to the US dollar.
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