Outlook
The MXN is likely to remain within a defined range in the near term, with the path shaped by domestic policy and trade dynamics. Banxico’s hold at 7.25% signals a cautious stance and a pause in the rate-cutting cycle, limiting near-term upside for the peso from monetary easing. A Citi survey of 35 financial institutions points to 2026 GDP growth around 1.3% and a year-end target near 19 MXN per USD, implying modest depreciation pressure if growth underwhelms or external conditions tighten. Tariffs up to 50% on imports from China and other non-FTA economies from January 1, 2026 add trade friction that can weigh on the peso on risk-off days, while expectations of a tourism-driven pickup and infrastructure spending around mid-2026 offer potential FX inflows that could support the currency. Taken together, the MXN may stay range-bound with a mild downside bias unless trade risks ease or domestic growth beats expectations.
Key drivers
- Growth outlook: Citi survey of 35 financial institutions sees 2026 GDP around 1.3% and a year-end MXN near 19 per USD.
- Monetary policy: Banxico keeps the policy rate at 7.25%, indicating a pause in the easing cycle.
- Trade policy: Tariffs up to 50% on imports from China and non-FTA partners up to 1,400 product categories from Jan 1, 2026.
- Tourism and infrastructure: Nearly 6 million additional visitors expected in mid-2026, with infrastructure upgrades underway to accommodate the surge.
Range
MXN to USD (USD per MXN) is 0.057604, which is 4.2% above its 3-month average of 0.055294, having traded in a relatively stable 7.7% range from 0.053496 to 0.057638.
MXN to EUR (EUR per MXN) is 0.048503, which is 2.3% above its 3-month average of 0.047423, having traded in a quite stable 5.3% range from 0.046468 to 0.048915.
MXN to GBP (GBP per MXN) is 0.042116, which is 1.6% above its 3-month average of 0.041469, having traded in a quite stable 4.2% range from 0.040883 to 0.042584.
MXN to JPY (JPY per MXN) is 8.8933, which is 3.1% above its 3-month average of 8.6238, having traded in a quite volatile 10.4% range from 8.2185 to 9.0702.
What could change it
- A surprise shift in Banxico policy path (earlier or unexpected rate cuts or hikes) that alters carry potential and FX flows.
- A material shift in US policy or global risk appetite that strengthens or weakens the USD broadly.
- Changes to the tariff regime or new trade developments that ease or escalate trade tensions affecting MXN.
- A stronger-than-expected domestic growth impulse from tourism and investment, or a deterioration of the external environment that weighs on Mexico’s outlook.
