Uncertainty and volatility will persist in markets

After a hectic 2024, with elections in Mexico and the United States, which caused relevant adjustments in the exchange rate and the stock market, in 2025 high levels of uncertainty and volatility will persist with the upcoming events, to begin with, the inauguration of the president of the United States, Donald Trump, on January 20, and the measures he will announce on trade and immigration matters.

Deportations could impact inflation and labor force dynamics on both sides of the border, and later, remittances. In Mexico, weaker employment generation and consumption would push growth back to less than one percent in 2025, explained Eduardo Suárez, vice president of economic analysis for Latin America at Scotiabank.

This would be the country’s lowest GDP since 2002, when growth was practically zero and would barely be above the contractions of 2009, 2019 and 2020.

Although the review of the Treaty between Mexico, the United States and Canada is scheduled for 2026, it will be a priority issue for Trump and for all types of investors.

The allegations that Mexico is a back door for China to enter the US market will probably continue to be recurring, which could keep uncertainty high, said the Scotiabank specialist.

On the other hand, if the monetary policies of the United States and Mexico are decoupled, this could significantly impact the exchange rate if the rate differential between these countries is reduced below 5 percentage points. Meanwhile, the peso will continue to lose ground against the dollar and it could fluctuate between 20 and 21 pesos.

All companies have a certain risk with the exchange rate, so it is advisable to hedge against any possible important movement, recommended José Miguel de Dios, general director of the Mexican Derivatives Market.

If Donald Trump follows through on what he has said about tariffs and deportations, what would happen to the exchange rate? If none of that happens, what would happen? Where is the risk? What could be the worst case scenario and how can it be measured?he stated.