The Mexican peso pared losses against the U.S. dollar on Wednesday after the White House said President Donald Trump's planned tariffs on steel and aluminum imports might allow exemptions for Canadian and Mexican producers.
The Mexican currency was up 0.14 percent at 18.712 peso per dollar. It improved from 18.9000 peso earlier on Wednesday.
The dollar, meanwhile, held steady on Wednesday, recouping earlier losses tied to the exit of a top economic adviser to U.S. President Donald Trump, which had raised concerns that tensions over a global trade war were entering a heightened phase.
Doubts among traders persist over whether Trump's proposed tariffs on imported steel and aluminum will be enacted, even after the White House signaled they would go into effect following the resignation of Gary Cohn, the director of the National Economic Council. Traders also are looking to gauge the level of possible retaliation from the European Union, Canada, Mexico and other major U.S. trade partners if these stiff levies were to be implemented.
"So far the reaction has been muted," Sireen Harajli, currency strategist at Mizuho in New York, said of the dollar. "(Cohn's) resignation has signaled higher risk of a trade war."
Cohn's departure comes against the backdrop of steps by the Trump administration to assert protectionist policies, including withdrawing the United States from the Trans-Pacific Partnership, instigating a renegotiation of NAFTA and imposing hefty import tariffs on some targeted products.