What Happened to Mexican Peso?
The Mexican Peso (MXN) has experienced significant volatility and appreciation in recent years, driven by factors such as attractive interest rate differentials, a weaker U.S. dollar in 2025, and the nearshoring trend. Despite political uncertainty and potential trade tensions, the peso has shown resilience, though forecasts for late 2026 suggest a slight depreciation from its strongest levels.
Quick Answer
The Mexican Peso has demonstrated remarkable strength, often termed the 'Super Peso,' appreciating significantly in 2025 and maintaining relatively stable levels around 17.5 MXN/USD in mid-2026. This strength is primarily attributed to Mexico's high interest rates relative to the U.S., substantial foreign direct investment driven by nearshoring, and robust remittances. However, the peso faces potential headwinds from narrowing interest rate differentials, ongoing USMCA review uncertainties, and domestic political reforms, with forecasts suggesting a slight weakening towards the 18-19 peso per dollar range by the end of 2026.
📊Key Facts
📅Complete Timeline14 events
Peso Under Pressure Ahead of Elections
Analysts predict the Mexican peso will be under pressure in 2024 due to uncertainty surrounding presidential elections in both the U.S. and Mexico, with an average exchange rate forecast of 18.9 pesos per U.S. dollar.
Mexican Presidential Election and Peso Depreciation
Claudia Sheinbaum wins the Mexican presidency, and the ruling Morena party secures large majorities in Congress. The peso depreciates sharply by about 4% overnight due to investor concerns over potential constitutional reforms.
Peso Continues to Weaken Amid Reform Vows
The peso declines further as the incoming and outgoing presidents vow to proceed with controversial constitutional changes, including judicial reforms, unsettling investors.
Peso Closes 2024 with Significant Depreciation
The Mexican peso closes 2024 at 20.88 to the U.S. dollar, booking approximately a 19% depreciation for the year, after a tumultuous second half.
U.S. Imposes Tariffs on Mexico and Canada
A trade war begins as the U.S. president signs orders imposing near-universal tariffs on goods from Mexico and Canada, initially set at 25% for most imports.
U.S. Tariffs Take Effect, USMCA Exemptions Later Applied
U.S. tariffs on Canada and Mexico take effect, though later in March, the U.S. exempts goods compliant with the USMCA, mitigating some of the impact.
Peso Recovers, Appreciates Nearly 16%
The Mexican peso ends 2025 significantly stronger, appreciating almost 16% against the U.S. dollar to trade around 18 pesos per dollar, defying many expectations.
Peso Reaches Strongest Level Since July 2024
The Mexican peso appreciates for a fifth consecutive trading day, closing at 17.65 to the dollar, its strongest level since July 12, 2024, driven by dollar weakness and carry trade.
Peso Strength Carries into 2026
The Mexican peso enters 2026 on firm footing, extending its recovery from early 2025 and trading near multi-year highs, driven by interest rate differentials and a softer U.S. dollar.
Peso Regains Strength After Inflation Data
The peso strengthens after new inflation data suggests a potentially more hawkish stance from Banxico, supporting demand for peso-denominated assets.
Peso Trades in Narrow Range, Forecast 17-20 for 2026
The peso trades in a narrow range between 17 and 18 pesos per dollar. Forecasters expect it to stay in a 17-20 range for 2026, influenced by interest rate differentials and trade policy.
U.S. and Mexico Launch USMCA Review Negotiations
The United States and Mexico launch official negotiations ahead of the mandatory July 2026 USMCA Joint Review, focusing on automotive rules of origin, steel, aluminum, and economic security.
USMCA First Joint Review Scheduled
The first mandatory joint review of the United States-Mexico-Canada Agreement (USMCA) is scheduled, a critical event for North American trade relations.
Current Exchange Rate and Outlook
The USD/MXN exchange rate is 17.5149. The peso has weakened 1.73% over the past month but is up 6.57% over the last 12 months. Forecasts suggest a slight depreciation to 17.909 in one year.
🔍Deep Dive Analysis
The Mexican Peso (MXN) has been a prominent currency in emerging markets, experiencing a dynamic period marked by both significant appreciation and periods of volatility. Following a challenging 2024, where it depreciated by approximately 19% against the U.S. dollar, closing the year at 20.88 pesos per dollar, the peso staged a strong recovery in 2025. This recovery saw it appreciate nearly 16% against the U.S. dollar, trading on average at 18 pesos per dollar in 2025. This 'Super Peso' phenomenon continued into early 2026, with the currency trading in a narrow range between 17 and 18 pesos per dollar.
Several key factors underpinned this strength. A major driver has been the substantial interest rate differential maintained by the Bank of Mexico (Banxico) compared to the U.S. Federal Reserve. Banxico aggressively hiked rates in 2022 and maintained a relatively high benchmark rate (around 7.00% in early 2026, down from a peak of 11.25% in 2024), making Mexican assets attractive for 'carry trade' strategies where investors borrow in lower-interest currencies and invest in higher-yielding ones. Additionally, the depreciation of the U.S. dollar by 9-10% in 2025 against a basket of currencies also contributed to the peso's gains.
The nearshoring trend, where companies relocate production closer to North American markets, has been another significant tailwind. Mexico became the United States' top trading partner in 2025, with substantial foreign direct investment (FDI) flowing into the country, particularly in manufacturing. For instance, Mexico received over $40 billion in FDI through September 2025, exceeding the full-year 2024 total, with Q1 2025 setting an all-time record at $21.4 billion. Remittances from Mexicans living abroad also provided a consistent boost, reaching a record $64.7 billion in 2024, though they saw a decline in the first half of 2025.
However, the peso's journey has not been without challenges. The Mexican presidential election in June 2024, which saw Claudia Sheinbaum win, initially led to a sharp depreciation of the peso. This was due to investor nervousness over the ruling Morena party's potential to secure supermajorities in Congress and push through constitutional reforms, including controversial changes to the judicial system. Trade policy uncertainty, particularly surrounding the USMCA review scheduled for July 2026, and threats of new U.S. tariffs have also introduced volatility. The narrowing interest rate differential between Banxico and the Fed, as Banxico continues its easing cycle (rates cut to 6.50% by July 2026), poses a risk to the carry trade.
As of July 13, 2026, the Mexican Peso is trading around 17.51 MXN/USD. While it has shown resilience, analysts anticipate a slight depreciation in the coming months, with forecasts placing the peso in the 17-20 range for 2026, and some expecting it to weaken to around 18.9-19.2 pesos per dollar by year-end. Mexico's economy is projected for modest GDP growth of 1.3-1.8% in 2026, with inflation persistently above the 3% target, which Banxico now expects to reach in 2027. The outcome of the USMCA review and the trajectory of U.S. trade policy will be critical in shaping the peso's performance in the latter half of 2026 and beyond.
What If...?
Explore alternate histories. What if Mexican Peso made different choices?