Background on the Mexican Peso and its Recent Strength
The Mexican peso has gained ground against the US dollar, reaching its best level since May 2024 and breaking through the 17.50 per dollar threshold on this Wednesday’s trading session.
Factors Contributing to the Peso’s Appreciation
The Mexican currency has been bolstered by a weakening US dollar, following President Donald Trump’s agreement with the EU in Davos. Additionally, reduced geopolitical tensions and a narrative of less economic pressure in the United States have further supported the peso.
- Weakening US dollar
- Reduced geopolitical tensions after Trump’s comments in Davos
- Narrative of less economic pressure in the US, which benefits Mexico
Data and Market Performance
According to Banco de México (Banxico) data, the peso closed at 17.4843 per dollar, marking a 0.69% or 12.13 centavos appreciation.
Year-to-date, the Mexican peso has advanced 2.91% against the dollar.
The US dollar index, which compares the US currency to six benchmark currencies, rose 0.15% to 98.79 points.
Among the most appreciated currencies were the Russian ruble (1.56%), Chilean peso (1.25%), Brazilian real (1.02%), South African rand (0.86%), South Korean won (0.80%), Mexican peso (0.69%), and Israeli shekel (0.60%).
Meanwhile, the Swiss franc (-0.88%), Indian rupee (-0.79%), Czech koruna (-0.43%), euro (-0.38%), Danish krone (-0.37%), Polish zloty (-0.24%), and Hungarian forint (-0.23%) were among the most depreciated currencies.
Other currencies that also weakened included the Japanese yen (-0.20%) and British pound (-0.19%).
Expert Analysis and Future Outlook
Diego Albuja, a market analyst at ATFX LATAM, explained that the closing reflects the dollar’s relative loss of strength in the short term, while the peso is backed by a better risk appetite and ongoing search for yield.
“Nonetheless, the market remains sensitive to any news from the US that could quickly alter sentiment,” he added.
Albuja also highlighted that the next catalyst will be upcoming macro data and signals from US monetary policy, which could determine if the dollar regains momentum or if the peso maintains its advantage.
Banamex experts assert that the “super peso” is back, supported by increased risk appetite and high interest rates.
Since last year, various factors have led to a strong depreciation of the dollar against other global currencies, notably trade uncertainty, rising US debt, and doubts about its long-term sustainability, as well as constant attacks on the autonomy of the Federal Reserve (Fed).
They further noted that, in the early days of 2026, “the dollar had shown a slight appreciation trend; however, this reversed in recent days due to escalating trade and geopolitical tensions between the US president and European leaders, and it is currently around 0.3% below its closing level of 2025.”
Impact of Trump’s Recent Statements
During the trading session, when the exchange rate was around 17.40 pesos per dollar, it lost some ground after Trump stated that “attacks against cartels will soon begin.”
“Although ambiguous, Trump’s statement opens the door to interpret possible more aggressive actions in the region, which could imply direct or indirect operations on Mexican territory, escalating tensions ahead of the T-MEC review,” said analysts from Monex Casa de Bolsa.
Future Peso Outlook
Diego Albuja mentioned that the scenario remains digestible, “provided no strong catalyst emerges to push the dollar, the exchange rate could remain stable with a bearish bias, respecting control zones near 17.45 to 17.50 and with resistance towards 17.60, opening tactical opportunities without needing to anticipate extreme movements.”
Monex expects the dollar to fluctuate between 17.42 and 17.57 pesos, “considering the strength of the local currency, pending the release of Mexico’s first-quarter January inflation report and the US PIB and PCE inflation reports.”
Key Questions and Answers
- Q: What factors contributed to the Mexican peso’s recent appreciation?
A: The weakening US dollar, reduced geopolitical tensions following Trump’s comments in Davos, and a narrative of less economic pressure in the US have all supported the peso. - Q: How has the Mexican peso performed year-to-date against the US dollar?
A: The Mexican peso has advanced 2.91% against the dollar in 2026. - Q: What are the expectations for the peso’s future performance?
A: Analysts expect the peso to remain stable with a bearish bias, potentially reaching 17.60, given the local currency’s strength and upcoming economic reports.
