Background on the Mexican Peso and its Recent Performance
The Mexican peso has extended its gains for a fifth consecutive day against the US dollar, driven by the weakening of the greenback in the international context due to a clear deceleration of the US economy.
Factors Contributing to Peso’s Appreciation
According to data from Banco de México (Banxico), the Mexican currency closed at 17.9509 pesos per dollar, marking a 0.17% or 3.03 centavo appreciation compared to its previous close, reaching its lowest level since July 22, 2024, when it closed at 17.9404 pesos.
This recent appreciation marks five consecutive trading sessions, during which the peso has gained 1.7% against the dollar year-to-date, with an overall appreciation of 14.04%.
The Intercontinental Exchange’s dollar index (DXY), which measures the US dollar against six reference currencies, fell 0.14% to 98.14 units.
Experts’ Perspectives on the Dollar’s Weakness
Diego Sebastián Albuja, an analyst at ATFX LATAM, explained that the dollar’s weakening globally and increased demand for emerging market currencies, with the peso standing out, contributed to this movement.
Albuja further stated that the peso’s performance is a result of expectations for adjustments in Banxico’s monetary policy and a more favorable external environment, with mixed US economic data maintaining the narrative of potential interest rate cuts by the Federal Reserve until 2026.
“This has reduced the demand for dollars as a safe-haven currency and allowed the peso to perform well. For investors, this scenario suggests a more stable short-term foreign exchange market, with the USD/MXN exchange rate moving within an approximate range of 17.85 to 18.10 pesos, benefiting importers and helping control inflationary pressures,” he added.
Analysts from Banamex also pointed out various factors leading to the dollar’s significant depreciation against other currencies in 2025, including low-interest rate expectations, trade uncertainty, rising US debt levels, and doubts about their long-term sustainability, as well as constant challenges to the Federal Reserve’s autonomy.
They also noted that, in line with the prevailing uncertainty surrounding the US economy throughout 2025, there have been movements towards safe-haven assets other than the dollar and a risk appetite for certain emerging market currencies.
Key Questions and Answers
- What is driving the Mexican peso’s appreciation against the US dollar? The weakening of the US dollar in the international context, due to a clear deceleration of the US economy, has contributed to the Mexican peso’s gains.
- What factors have led to the dollar’s weakness? Factors such as low-interest rate expectations, trade uncertainty, rising US debt levels, and doubts about their long-term sustainability have contributed to the dollar’s depreciation.
- How are Mexican analysts viewing the peso’s performance? Analysts from Banamex see a more stable short-term foreign exchange market with the USD/MXN exchange rate moving within an approximate range of 17.85 to 18.10 pesos, benefiting importers and helping control inflationary pressures.
- What should investors expect in the near future regarding the peso-dollar exchange rate? Investors can anticipate a more stable foreign exchange market in the short term, with the peso-dollar exchange rate moving within a narrow range.
