The dollar-Mexican peso exchange rate posted slight gains at the market opening on Friday, May 16. The exchange rate with the US dollar is expected to close relatively stable after the Bank of Mexico (Banxico) cut its interest rate by 50 basis points.
Banxico’s governing board acknowledged in a statement that there are risks of a rebound in inflation, despite its downward trend in recent weeks.
Felipe Mendoza, financial markets analyst at ATFX Latam, noted in a note at the market opening that the United States continues its upward momentum, supported by strong institutional flows.
After the market opened, the US dollar was trading at an average of 19.51 Mexican pesos at the start of trading today, representing a 0.12% change compared to the previous session’s value of 19.49 pesos.
Considering the last seven days, the US dollar has risen 0.28% and, year-on-year, still maintains a 14.93% increase.
Regarding today’s variations compared to previous days, this is the second consecutive day of increases. Volatility for the last week is 10.4%, which is lower than the annual volatility figure (13.69%), indicating that it is experiencing a period of greater stability recently.
Economic Forecasts for 2025
The peso-dollar relationship during 2024 was marked by contrasts. The year began with the Mexican currency strengthening against the US dollar. The greenback reached 16 pesos per unit, something that hadn’t happened in almost a decade. The nickname “superpeso” was more enduring than ever.
However, as the peso advanced, it depreciated mainly due to political decisions, such as the controversial Judicial Reform and the elimination of autonomous bodies.
The Mexican peso’s decline worsened with Donald Trump’s campaign, his electoral victory as president of the United States, and his threats to impose tariffs on all Mexican—and Canadian—products if Mexico did not improve border security.
Thus, the dollar returned to 20 pesos, well above the forecasts of the Bank of Mexico (Banxico).
By 2025, Banxico expects the dollar to trade at an average of 20.24 pesos to 20.69 pesos, a conservative forecast considering the repercussions that Trump’s statements and policies in the White House would have on the exchange rate.
Inflation was relatively stable in 2024, hovering around 4%, except for June when it nearly reached 6%, according to data from the National Institute of Statistics and Geography (INEGI).
This year, Banxico forecasts that inflation will fall below four percentage points, reaching 3.8%.
Regarding Gross Domestic Product (GDP) growth, the low forecasts remain. The central bank expects GDP growth of just 1.2%.
What is the Mexican peso?
The Mexican peso is Mexico’s legal tender and the first currency in the world to use the $ symbol, which was later adopted by the United States for the dollar.
This currency is the fifteenth most traded currency in the world, as well as the most traded in Latin America and the third on the continent, behind only the US and Canadian dollars.
The abbreviation MXN is currently used to refer to the Mexican peso, but before 1993, the acronym MXP was used.
The coins commonly used in Mexico are semicircular and bear the national emblem on the reverse. One Mexican peso is equivalent to 100 cents. There are coins in denominations of 1, 5, 10, and 20 pesos; while bills are available in denominations of 20, 50, 100, 200, 500, and 1,000 pesos.
Source: infobae
