Outlook
The Mexican peso is expected to remain broadly stable in 2026, trading in a roughly 18–20 per USD band. The outlook is supported by Mexico’s improving macro backdrop and Banxico’s anti-inflation stance, reinforced by a 2025 easing cycle that delivered a 7.50% policy rate by September. Nearshoring and foreign investment continue to support Mexican assets, helping the peso against a volatile external environment. However, tariff developments with the United States and the path of U.S. rates remain the main sources of risk, capable of triggering episodic volatility around a generally stable trend.
Key drivers
- A stabilising domestic backdrop and Banxico’s inflation-focused policy frame, with the easing cycle in 2025 helping to support Mexican asset demand.
- Nearshoring and steady foreign direct investment lifting Mexican manufacturing activity and asset demand, underpinning peso resilience.
- Trade policy uncertainty, notably U.S. tariffs on Mexican imports (especially autos), and Mexico’s efforts to delay implementations to mitigate peso volatility.
- The external rate path, including the U.S. Federal Reserve’s trajectory, which influences carry and capital flows into Mexico.
Range
MXN to USD at 0.057925, 3.9% above its 3-month average of 0.05575, having traded in a relatively stable 7.8% range from 0.054040 to 0.058279.
MXN to EUR at 0.049016, 2.8% above its 3-month average of 0.047667, having traded in a fairly stable 4.9% range from 0.046825 to 0.049108.
MXN to GBP at 0.042549, 2.2% above its 3-month average of 0.041609, having traded in a very stable 3.9% range from 0.040994 to 0.042584.
MXN to JPY at 9.1059, 4.6% above its 3-month average of 8.7073, having traded in a fairly volatile 9.4% range from 8.3215 to 9.1059.
What could change it
- A sharper-than-expected Mexican growth or inflation outcome that alters Banxico’s policy path, including potential changes to the pace of easing.
- A shift in U.S. monetary policy, especially the timing and magnitude of rate cuts or hikes, altering the yield differential and dollar strength.
- Developments in U.S.–Mexico trade policy, including tariff decisions or rapid resolution, which could impact market risk sentiment and MXN volatility.
- Sustained strength or weakness in nearshoring investment and broader Mexican growth, which would influence capital flows and the peso's level beyond current expectations.
