The Mexican peso hovered around 17.8 per dollar on Tuesday, stabilizing near a seven-week low as a renewed pickup in domestic inflation strengthened expectations that the Bank of Mexico will opt for a hawkish pause. Annual inflation rose to 4.02% in February, overshooting market forecasts of 3.94% and breaching the central bank’s 4% upper limit for the first time in nearly a year. The acceleration was largely driven by sharp increases in processed food prices and a 9.88% jump in fruit and vegetable costs, while core inflation remained persistently high at 4.5%. These figures have effectively reduced the chances of an interest rate cut in March, offering the currency some short-term support despite the introduction of 10% global import tariffs in early 2026 and the ongoing conflict in the Middle East. Although higher oil prices bolster Mexico’s fiscal position, the peso remains exposed to broader risk-off moves favoring safe-haven assets such as the US dollar, as geopolitical tensions and softening US demand continue to weigh on the country’s export outlook.