The Mexican peso enjoyed a good start to the week, trading higher against the dollar. The US dollar lost more than one percentage point against the Mexican peso during the early hours of Monday.
After the opening bell, the US dollar averaged 19.20 Mexican pesos at the start of the day, representing a 1.18% change compared to the previous day’s figure of 19.43 pesos.
The peso’s rise against the dollar follows the unprecedented election held on Sunday to elect judges, magistrates, and ministers. Although only 13% of the electorate participated, the government hailed the process as a success, while the ruling party criticized the elections for risks to judicial independence and a lack of transparency.
The dollar, meanwhile, is experiencing volatility following the international tensions experienced in recent days.
Despite the Court’s veto, US President Donald Trump continues his tariff war and seeks to raise tariffs on steel and aluminum to 50%. The president also accused China of violating a tariff agreement.
At the same time, weaker economic growth and higher prices in the US threaten the S&P 500’s rally.
Furthermore, Ukraine and Russia began peace talks in Istanbul, with the European Union threatening to take countermeasures if these talks fail.
Meanwhile, Iran rejected a US nuclear proposal and Tesla vehicle sales fell in France, in addition to a collapse in maritime traffic between China and the United States that reflected trade tensions.
Regarding seven-day performance, the US dollar is down 0.26%; in contrast, it has still accumulated a gain of 3.97% over the past year.
Regarding today’s changes compared to previous days, it reversed the previous day’s figure, which closed with a 0.41% increase, proving unable to establish a clear trend recently. The volatility figure is lower than the figures for the last year (13.64%), so its price has been experiencing fewer fluctuations than usual in recent days.
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” remained more enduring than ever.
However, as the peso progressed, 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 election 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).
For 2025, Banxico expects the dollar to trade at an average of between 20.24 pesos and 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 almost 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 to 3.8%.
Regarding Gross Domestic Product (GDP) growth, the low forecasts remain. The central bank expects a GDP increase 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 $ sign, 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 normally used in Mexico are semicircular in shape and have the national coat of arms on the reverse. One Mexican peso is equivalent to 100 cents. There are coins in denominations of 1, 5, 10, and 20 pesos. while in bills there are 20, 50, 100, 200, 500 and 1,000 pesos.
Source: infobae
