The Mexican Peso (MXN) has recently experienced fluctuations influenced by several key factors. Analysts note that the Bank of Mexico (Banxico) has retained a higher interest rate compared to the U.S. Federal Reserve, which has attracted investors seeking better returns. As a result, the peso has seen some support, contributing to its recent strength in the currency market.
However, the landscape for the peso is turning more complex due to the expiration of a temporary tariff hike freeze by the U.S., which has raised concerns about potential volatility. Forecasters suggest that this development may lead to a gradual decline in the peso's value over the next year. Compounding these concerns is the reported 0.7% year-over-year decline in Mexico's Global Indicator of Economic Activity for February 2025, which has prompted a reevaluation of the country’s economic growth prospects.
Political developments also play a crucial role in shaping investor sentiment. The election of Claudia Sheinbaum as Mexico's first female president in June 2024 has resulted in a supermajority in Congress. This shift raises concerns regarding potential anti-market reforms, further affecting investor confidence in the peso.
In terms of recent performance, the MXN to USD rate stands at 0.054334, which is 1.5% above its 3-month average of 0.053514. The peso has traded within a stable range, showing resilience in the face of market uncertainties, fluctuating between 0.051974 and 0.054684. Similarly, the MXN to EUR is slightly elevated at 0.046259, which is 1.0% above its 3-month average, indicating a relatively stable trading range.
The MXN has also reached 90-day highs against the GBP at 0.040327, reflecting a substantial 1.7% increase over its 3-month average. The performance against the JPY is noteworthy, with the rate currently at 8.0380, which is 2.1% above the 3-month average, demonstrating a consistent trading range.
Overall, while the Mexican peso has shown some strength in recent weeks, it faces potential headwinds from geopolitical changes and economic indicators that merit close monitoring.
