Outlook
The peso faces a mix of support and uncertainty. Banxico’s 7% policy rate sustains a favorable carry and continues to attract non-resident demand for peso assets. Nearshoring and higher oil receipts bolster external accounts and underpin the peso. Bank of America projects USMCA continuity with annual reviews, which could create policy and planning uncertainty, especially for energy-related trades. Overall, MXN could stay supported on solid fundamentals but may remain sensitive to trade headlines and oil-price moves.
Key drivers
- Bank of America projects USMCA continuity with annual reviews (USMCA = US-Mexico-Canada Agreement), injecting uncertainty for energy-sector planning.
- Banxico holds the policy rate at 7%, maintaining an attractive yield differential and ongoing non-resident demand for peso-denominated assets.
- Nearshoring and foreign investment in Mexico, including Heineken’s and Unilever’s expansions (nearshoring = moving manufacturing closer to the US, i.e., into Mexico).
- Oil prices and commodity strength support Mexico’s fiscal and external accounts, reinforcing peso resilience.
Range
MXN/USD: 0.058045, 4.7% above its 3-month average of 0.055434; traded in a 8.9% range from 0.053496 to 0.058279.
MXN/EUR: 0.048504, 2.1% above its 3-month average of 0.047485; range 0.046468–0.048915.
MXN/GBP: 0.042038, near 14-day lows, 1.3% above its 3-month average of 0.041504; range 0.040926–0.042584.
MXN/JPY: 8.8898, 2.8% above its 3-month average of 8.6436; range 8.2185–9.0702.
What could change it
- A material shift in USMCA negotiations or an unexpected policy installment requiring annual reviews that alters trade/investment dynamics.
- Banxico surprises with a rate move (hike or cut) or changes forward guidance beyond the current 7% hold.
- A sharp change in oil prices or global risk sentiment affecting Mexico’s external accounts.
- Faster or slower-than-expected nearshoring investment and foreign capital inflows.
