Outlook
MXN is likely to remain in a cautious, range-bound mode through near-term trading. MXN/USD sits near 90-day highs around 0.05828 USD per MXN (roughly 1 USD = 17.15 MXN), about 5.3% above the 3-month average of 0.05535, and has traded in a roughly 8.9% range from 0.05350 to 0.05828. A Citi survey of 35 financial institutions projects Mexico’s GDP at about 1.3% in 2026 and the peso weakening to around 19 per USD by year-end, underscoring downside risk if global sentiment turns risk-off. Banxico has kept the policy rate at 7.25%, signaling a pause in its easing cycle for now.
The impact from policy and policy changes is mixed. Mexico’s tariff move, effective January 1, 2026, imposing up to 50% duties on imports from China and other non-FTA countries across more than 1,400 product categories, adds policy uncertainty but could gradually improve the current account if substitution effects materialize. Meanwhile, a tourism rebound and infrastructure upgrades in Mexico City—nearly 6 million additional visitors expected in June–July 2026—offer potential inflows that can support the peso. Taken together, the MXN faces a modest depreciation bias in a cautious global backdrop, with limited upside unless tourism and trade dynamics translate into stronger capital inflows.
Key drivers
- Domestic growth and Banxico policy: GDP growth seen around 1.3% in 2026; rate held at 7.25% suggests a pause in easing, limiting near-term strength from domestic rate differentials.
- Trade policy changes: Tariffs up to 50% on imports from China and other non-FTA countries across 1,400+ categories introduce policy risk and supply-chain adjustments, with potential long-run trade balance benefits if substitution takes hold.
- Tourism and infrastructure: A boost from up to ~6 million additional visitors in mid-2026 and ongoing upgrades in Mexico City support tourism receipts and investment flows, which can provide peso support.
- Price action context: MXN/USD trading near 90-day highs around 0.05828, 5.3% above the 3-month average (0.05535), with a 90-day range of 0.05350–0.05828.
- External risk backdrop: USD strength or global risk-off moves could pressure the MXN despite domestic positives.
Range
0.053496–0.058279
What could change it
- US macro data or Fed policy shifts could alter risk sentiment and USD strength, impacting MXN.
- Banxico guidance or policy changes (e.g., unexpectedly dovish or hawkish tilt) could alter yield appeal and MXN direction.
- Further developments in trade policy (tariffs, retaliation, or trade agreements) could shift the current account dynamics and capital flows.
- A stronger tourism rebound or larger-than-expected capital inflows tied to infrastructure spending could provide MXN support and offset some depreciation pressure.
