USD/MXN forecasts change all the time, affected by news events and relative sentiment towards the US and Mexican economies and this exchange rate is even more volatile than usual because of the uncertainties around the Coranavirus pandemic and the increase US interest rates.
When uncertainty increases, traders tend to move quickly out of emerging market FX such as the peso first before looking for safe havens.
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The Mexican peso has an important psychological level of 20 against the greenback. If a US dollar buys well above 20 peso then the Mexican currency is seen to be weak.
This of course is an opportunity for the large Mexican diaspora to send money back home at advantageous rates.
The foreign exchange market convention for USD/MXN is to quote Mexican peso as Peso per US dollar. Thus a higher USD/MXN rate actually means one peso is worth less, that is you can buy more peso for 1 USD.
Economists expect the US dollar’s strength over the past year to reverse in 2023 as the Fed’s interest rate hikes cycle to an end.
A clear reflection of this is that the US Dollar index (measure of the USD strength against basket of currencies) which has pulled back from 20 year highs.
Disclaimer: Please note any provider recommendations, currency forecasts or any opinions of our authors should not be taken as a reference to buy or sell any financial product.