Supported by rising oil prices and bets that interest rates will increase this week, the battered Mexican peso strengthened on Wednesday.
And a general feeling that White House border and trade policies may not be so easily realized further buoyed the currency.
The peso rose 1.65 percent to its highest level in 2017. While trading above last Friday’s 19.02 high at 1 a.m. EST on Wednesday morning, by 3:30 p.m., the USD/MXN rate had dropped down to 18.71985 — the lowest rate this year.
The peso has recovered to pre-election levels after an all-time low set in January, when Trump took office.
Lately the White House has been less vocal about Mexico’s role in a $20-$60 billion border wall. U.S. Senate Majority Leader Mitch McConnell has flat out denied there’s any chance that Mexico will contribute to its cost.
It’s also unlikely that Congress’s fiscal-year 2017 budget will include any provisions for funding the wall. The White House is still scrambling to find funding for the project.
Adding to doubts, in a speech Tuesday, Interior Secretary Ryan Zinke said the wall is an especially complicated project because the Rio Grande already serves as a natural divider. Zinke said that electronic surveillance devices may be more useful instead of a physical wall in some places. But Trump has insisted that only a physical wall will do.
Democrats quickly claimed that Zinke’s vague comment was a suggestion to put the wall on the Mexican side of the river.
“These guys… now the wall is going to be IN Mexico,” tweeted Matt House, a staffer for Democratic U.S. Sen. Chuck Schumer of New York.
Also Tuesday, the White House unveiled its latest proposal to fund the wall, asking Congress to cut $18 billion from the 2017 federal budget. That would de-fund federal community grants, medical research initiatives and infrastructure projects.
In January, the Trump administration suggested a paying for the wall with a 20 percent tax on Mexican imports, but that plan withered amid public outrage. U.S. consumers apparently were not thrilled with paying more for Coronas and avocados.
Sources: Tribune, Reuters, CNN