Background on the Mexican Peso and Its Recent Performance
The Mexican peso concluded its best year since the onset of the free-floating regime, primarily driven by the dollar’s weakness. On the final trading day of the year, the peso ended virtually unchanged against the dollar with low market volume and after receiving U.S. employment data.
Key Figures and Market Movements
The exchange rate closed at 18.0080 pesos per dollar, a slight decrease of 1.21 centavos (0.07%) from the previous day’s close of 17.9959 pesos, according to official data from the Banco de México (Banxico). The dollar’s price fluctuated between a high of 18.0242 pesos and a low of 17.9543 pesos.
Meanwhile, the Dollar Index (DXY) from the Intercontinental Exchange, which compares the U.S. dollar to six reference currencies, increased by 0.09% to 98.32 units.
Mexican Peso’s Historic Best Year
With this minor decline, the peso barely stayed above the psychological level of 18 pesos per dollar. Compared to the 20.8829 pesos closing in 2024, the currency accumulated an appreciation of 2 pesos and 87 centavos, equivalent to 13.77%. December was a positive month for the exchange rate, which ended November at 18.2953 pesos.
The dollar’s weakness and the Federal Reserve’s (Fed) key interest rate adjustment led to the parity reaching its lowest point in July 2024 (17 months). Consequently, the Mexican peso had its best year ever, according to Banxico records.
Expert Opinion on the Peso’s Performance
Juan Carlos Cruz Tapia, CEO of México Financiero, commented on the peso’s challenging year amidst cross-tariff circumstances affecting supply chains and inflation, along with global geopolitical tensions weakening the dollar:
“The peso had a challenging year against a backdrop of cross-tariffs affecting value chains and inflation, along with global geopolitical tensions weakening the dollar. However, locally, sound public finances, prudent fiscal management, and a robust labor market have instilled confidence, making the peso the second-best performing currency in Latin America in 2025, only behind the Colombian peso.”
Crucial Data Release of the Year
The weekly data on new U.S. unemployment benefit applications decreased by 16,000 to a seasonally adjusted 199,000 during the week ending December 27. Analysts had expected 220,000 new claims.
This data was released a day earlier than usual due to minimal government and market activities for New Year’s. Market activity remains low, so significant changes are unlikely.
The peso advanced with minimal trading volume, as the market absorbed the U.S. labor data as the final reference of the year, according to Janneth Quiroz Zamora, director of Economic, Currency, and Securities Analysis at Grupo Financiero Monex.
Key Questions and Answers
- Q: What factors contributed to the Mexican peso’s best year?
A: The primary factor was the dollar’s 9.43% weakening, along with Mexico’s effective management of its relationship with the U.S., avoiding new tariffs.
- Q: How did the U.S. employment data impact the Mexican peso?
A: The lower-than-expected new unemployment benefit applications in the U.S. supported the peso’s advance, as markets considered it the final reference of the year.
- Q: What makes the Mexican peso stand out among other Latin American currencies?
A: Sound public finances, prudent fiscal management, and a robust labor market have instilled confidence in the Mexican peso, making it the second-best performing currency in Latin America in 2025.
