FOREX-Dollar lower after U.S. tariffs on Mexico paused for a month

Updates with pause on Mexico tariffs

By Hannah Lang

NEW YORK, Feb 3 (Reuters) - The dollar index was lower on Monday after U.S. President Donald Trump paused new tariffs on Mexico for one month, after the country agreed to reinforce its northern border with 10,000 National Guard members to stem the flow of illegal drugs, Trump said.

Mexico and the U.S. will use the month-long suspension to engage in further negotiations, Trump said.

The delay boosted the Mexican peso MXN=. It was last up 0.95% against the dollar at 20.481. Earlier, it fell to its lowest in nearly three years at 21.2882 per U.S. dollar.

Meanwhile, the dollar index =USD was down 0.639% at 108.81. It had touched a three-week high of 109.88 in early trading.

As Trump promised last month, the U.S. over the weekend announced it would hit Canada and Mexico with 25% duties and China with a 10% levy starting on Tuesday, calling them necessary to curb immigration and narcotics trafficking.

Trump said on Monday he had spoken with Canadian Prime Minister Justin Trudeau and would do so again at 3 p.m. ET (2000 GMT). The tariffs on Canada and China remain poised to take effect on Tuesday, and Canada has announced retaliatory tariffs.

A senior Canadian official told a New York Times reporter that Ottawa is not optimistic that a similar reprieve is in the offing, the reporter said on X.