Outlook
The peso remains supported by Banxico’s 7% policy rate, nearshoring investment, and higher oil prices, but uncertainty around annual USMCA reviews adds a headwind. In the near term, expect range-bound trading with a mild bias to strength if oil and investment momentum hold, but gains could be capped by renewed trade-policy uncertainty.
Key drivers
- Bank of America projects USMCA continuity with annual reviews, introducing uncertainty for energy-sector investment. (US trade framework)
- Banxico holds at 7%, creating an attractive yield differential (the gap between Mexican and other rates) that draws non-resident peso inflows. (monetary policy stance)
- Nearshoring and foreign investment—e.g., Heineken's $2.75 billion brewery in Yucatán and Unilever’s $1.5 billion expansion—support the peso. (nearshoring)
- Oil prices and commodity strength bolster Mexico’s fiscal and trade accounts, lending support to the peso. (commodity/energy link)
Range
MXN to USD is at 90-day highs near 0.058279, 5.2% above its 3-month average of 0.055395, having traded in a fairly volatile 8.9% range from 0.053496 to 0.058279. MXN to EUR at 0.048654 is 2.5% above its 3-month average of 0.047468, having traded in a quite stable 5.3% range from 0.046468 to 0.048915. MXN to GBP at 0.042158 is 1.6% above its 3-month average of 0.041495, having traded in a quite stable 4.1% range from 0.040926 to 0.042584. MXN to JPY at 8.9189 is 3.3% above its 3-month average of 8.6381, having traded in a quite volatile 10.4% range from 8.2185 to 9.0702.
What could change it
- A shift in USMCA terms via annual reviews or new policy changes could alter trade dynamics and peso demand.
- Banxico policy surprises (rate cuts or hikes) could widen or close the yield differential and shift flows.
- A significant move in oil prices or broader commodity markets could strengthen or weaken the peso’s fundamentals.
- Changes in US macro data or Federal Reserve signaling could influence USD strength and MXN sentiment.
