Mexican Peso Rises on Hopes for Middle East De-escalation

The Mexican peso rose sharply Monday, gaining 0.69 percent to close at 17.77 units per dollar, as markets reacted to signals of potential de-escalation in tensions between the United States and Iran. The advance followed a volatile trading day spurred by comments from U.S. President Donald Trump suggesting a possible agreement to end the conflict in the Middle East.

Trump stated that conversations between the two nations had yielded “important points of agreement,” a claim swiftly denied by the Iranian government, according to reports. The initial surge in optimism came after Trump announced he was postponing planned military strikes against Iranian electrical facilities. He had previously threatened to destroy Iran’s energy infrastructure if the Strait of Hormuz remained closed.

The peso’s appreciation mirrored gains seen across the region, though the advance was tempered after Mohammad Baqer Qalibaf, speaker of the Iranian Parliament, refuted any direct talks with the United States, as reported by El Economista. The currency had earlier weakened to 18.0834 units, a level not seen since mid-December, before rebounding on Trump’s announcement.

According to Banco de México data, the peso closed the session at 17.7801 units per dollar, a 0.98 percent increase from Friday’s close of 17.9557. The dollar index, which measures the U.S. Currency against a basket of six major currencies, fell 0.49 percent to 99.16 points at the close of trading.

Gabriela Siller, director of Analysis at Banco Base, noted that Trump’s comments appeared to be an effort to calm markets after an earlier increase in risk aversion triggered by his Saturday threat to destroy Iranian energy plants if the Strait of Hormuz remained blocked.

Despite the momentary reprieve, analysts cautioned that volatility remains high. Felipe Mendoza, an analyst at EBC Financial Group, warned that if Iran follows through on promises of retaliation or if the de-escalation is perceived as insincere, the exchange rate could quickly rebound to 18.10 units or higher. The Mexican currency has accumulated a depreciation of 3.18 percent against the dollar since the start of the conflict involving the United States, Israel, and Iran in March.

The price of the dollar varied across Mexican banks at the close of business on Monday. BBVA México offered 16.87 pesos for purchase and 18.00 pesos for sale, whereas Banamex offered rates of 17… (rates incomplete in source).