Outlook
MXN faces modest pressure from domestic policy and trade dynamics, with forecasted growth of about 1.3% in 2026 and a path skewed toward a weaker peso by year-end. Banxico has kept the policy rate at 7.25% and signaled a pause in cutting, while tariff measures on non-FTA imports raise trade cost and inflation risks. A tourism rebound and infrastructure upgrades in Mexico City provide some supportive sentiment, but the currency may stay choppy as policy and trade headlines drive risk appetite.
Key drivers
- Growth and peso path: A Citi survey of 35 financial institutions sees Mexico’s GDP at about 1.3% in 2026, with the peso expected to weaken toward around 19 per USD by year-end (via Mexico News Daily).
- Monetary policy stance: Banxico holds the policy rate at 7.25% and has signaled a potential pause in its rate-cutting cycle, shaping a neutral to mildly supportive stance for the peso depending on inflation dynamics.
- Trade policy impact: Tariffs of up to 50% on imports from China and other non-FTA countries take effect January 1, 2026, affecting more than 1,400 product categories and adding to price pressures and external balance considerations.
- Tourism and infrastructure: A surge in visitors (nearly 6 million more expected in mid-2026) accompanies infrastructure upgrades in Mexico City, contributing to positive demand signals and potential FX resilience if tourism inflows materialize.
- Price action context: Current cross rates show MXN weakening versus major currencies, with MXN/USD near 90-day highs around 0.057594 (about 4.4% above the 3-month average of 0.055186). Similar patterns appear against EUR, GBP, and JPY, indicating broad USD-denominated strength in the recent window.
Range
MXN/USD has traded in a 7.7% range from 0.053496 to 0.057594, with the 90-day high near 0.057594 (4.4% above the 3-month average of 0.055186). MXN/EUR has ranged from 0.046468 to 0.048915, about 2.8% above the 3-month average of 0.047366. MXN/GBP has traded between 0.040724 and 0.042584, roughly 1.9% above the 3-month average of 0.041425. MXN/JPY has fluctuated from 8.2185 to 9.0702, about 4.2% above the 3-month average of 8.6055.
What could change it
- Banxico policy surprise: Any unexpected rate move (hike or surprise easing) or shifts in forward guidance could alter the Peso’s trajectory.
- Trade policy developments: Changes to tariffs, exemptions, or broader trade policy direction could shift external pressures on MXN.
- Domestic data surprises: Stronger-than-expected inflation or growth prints (or a sharper slowdown) could reprice rate expectations and FX flows.
- US/global risk sentiment: A shift in risk appetite or US monetary policy surprises could amplify or dampen EM currency moves, including MXN.
- Tourism/remittance / capital flows: Unexpected changes in tourism receipts or remittance levels, along with portfolio flows, could provide unexpected support or drift for the peso.
