Recent developments in the Mexican peso (MXN) have been influenced by multiple factors, resulting in a mix of expectations for future performance. The Bank of Mexico has maintained higher interest rates compared to the U.S. Federal Reserve, which has Enhanced interest from investors seeking better returns. Analysts have noted that this dynamic has contributed to the peso trading near 90-day highs against the U.S. dollar, with current rates at approximately 0.054684, a notable 2.2% above its three-month average.
However, the expiration of a temporary U.S. tariff hike freeze is expected to introduce some volatility into the currency market. According to reports, this scenario may result in a mild depreciation of the peso over the coming year. Concerns regarding trade relations are compounded by recent economic data indicating a year-over-year decline of 0.7% in Mexico's Global Indicator of Economic Activity for February 2025, which raises doubts about the strength of future growth.
Political changes are also weighing on investor sentiment. With the election of Claudia Sheinbaum as Mexico's first female president, analysts express apprehension about potential anti-market reforms, especially with her party holding a supermajority in Congress. This has led to uncertainties that could affect medium-term confidence in the peso.
In terms of cross-currency performance, the peso has demonstrated stability against other currencies as well. The exchange rate for MXN to EUR is around 0.046050, slightly above its three-month average, while against the GBP it is at 0.040029, also reflecting a modest increase. The rate against JPY has seen a similar trend, trading at approximately 7.9999, which is 1.8% above its three-month average. Overall, while the peso has shown strength in the short term, underlying factors suggest a cautious approach may be warranted moving forward.
