Outlook
The Mexican peso faces a mixed, modestly softer path into 2026. A 1.3% GDP growth forecast for Mexico and Banxico’s hold at 7.25% point to a cautious, non-easing stance that may keep yields attractive but growth uneven. Tariffs up to 50% on imports from China and non-FTA countries introduce downside risks to domestic demand and the external sector, potentially weighing on the MXN. By contrast, a tourism surge—nearly 6 million additional visitors expected during June–July 2026—and related infrastructure upgrades could provide foreign currency receipts and support the peso. Markets therefore expect some drift weaker versus the dollar toward year-end, with Citi estimating the peso around 19 per USD, though a stronger tourism backdrop and a restrained rate-cut path could temper sharper moves. Current price action reinforces a softer tone versus the dollar, with MXN/USD hovering near 90-day highs.
Key drivers
- Economic growth and currency path: A Citi survey of 35 financial institutions forecasts Mexico’s GDP at about 1.3% in 2026 and the peso weakening toward around 19 per USD by year-end (Mexico News Daily). This points to a baseline for softer MXN under a growth and policy backdrop.
- Monetary policy: Banxico has kept the policy rate at 7.25%, signaling a potential pause in its rate-cutting cycle. This keeps yields relatively attractive but may limit growth acceleration (Scotiabank).
- Trade policy and external headwinds: Tariffs up to 50% on imports from China and non-FTA countries affect more than 1,400 product categories, adding risk to supply chains and inflation dynamics (Mexico News Daily). This raises downside risk to the MXN if growth slows and trade tensions persist.
- Tourism and domestic demand: An influx of nearly 6 million additional visitors during mid-2026 and accompanying infrastructure upgrades in Mexico City could bolster services receipts and FX inflows, offering some peso support (Mexico News Daily).
- Price action context: Current levels show MXN pairs trading at 90-day highs and modestly above 3-month averages, underscoring ongoing near-term USD strength and FX volatility. For example, MXN/USD sits near 0.0583 USD per MXN, about 5.2% above its 3-month average of 0.0554; MXN/EUR near 0.04865 EUR per MXN, about 2.5% above its 3-month average of 0.04747; MXN/GBP near 0.04216 GBP per MXN, about 1.6% above its 3-month average of 0.04150; MXN/JPY near 8.9189 JPY per MXN, about 3.3% above its 3-month average of 8.6381.
Range
MXN/USD: 0.053496–0.058279 (current near 0.058279; 5.2% above the 3-month average of 0.055395; range from 0.053496 to 0.058279)
MXN/EUR: 0.046468–0.048915 (current near 0.048654; 2.5% above the 3-month average of 0.047468; range from 0.046468 to 0.048915)
MXN/GBP: 0.040926–0.042584 (current near 0.042158; 1.6% above the 3-month average of 0.041495; range from 0.040926 to 0.042584)
MXN/JPY: 8.2185–9.0702 (current near 8.9189; 3.3% above the 3-month average of 8.6381; range from 8.2185 to 9.0702)
What could change it
- A more dovish or more aggressive shift in Banxico policy could alter the yield differential and MXN direction; any surprise rate cuts or hikes would move the currency accordingly.
- Better-than-expected or worse-than-expected Mexican macro data (growth, inflation, employment) could shift the outlook toward a firmer or softer MXN.
- Developments on US rate expectations or global risk sentiment could amplify or dampen MXN moves against the dollar.
- Further changes to trade policy or new tariff developments beyond January 2026 could alter the trade outlook and MXN trajectory.
- A stronger-than-expected tourism push or new source of FX inflows could provide support to the peso, offsetting some downside pressure.
