The Mexican peso weakened to 20.7 per U.S. dollar, after a brief recovery from its March 2022 low of 20.85 on December 31, pressured by Banxico's dovish tone, easing inflation, and a stronger U.S. dollar. Banxico's latest minutes hinted at larger rate cuts, aligning with inflation falling to a 46-month low of 4.21% annually in December, fueling expectations of a 50-basis-point cut in February. Simultaneously, robust U.S. jobs data reinforced expectations of a cautious Fed, with minimal rate cuts projected for 2025, supporting the dollar. Adding to the peso's woes, President-elect Donald Trump proposed declaring a national economic emergency to impose sweeping import tariffs, heightening concerns over Mexico's trade outlook.
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