Outlook
The peso faces a mixed near-term path. A Citi survey cited by Mexico News Daily points to 2026 GDP growth around 1.3% and a year-end target of about 19 MXN per USD, implying additional depreciation pressure for the MXN. Banxico’s decision to hold the policy rate at 7.25% keeps a high-rate environment supportive of value retention but may limit upside unless growth or inflation surprises to the upside. Tariffs on imports from China and other non-FTA countries add trade headwinds, while a planned boost in tourism and related infrastructure spending could provide some inflows. Overall, the MXN is likely to remain range-bound with bouts of volatility tied to policy signals and trade developments.
Key drivers
- Economic growth: 2026 GDP forecast around 1.3%, with a year-end peso trajectory anticipated weaker toward 19 MXN per USD by Citi’s outlook.
- Monetary policy: Banxico holding at 7.25%, suggesting a pause in the easing cycle and a comparatively restrictive stance for now.
- Trade policy: Tariffs up to 50% on imports from China and other non-FTA countries affecting over 1,400 product categories, creating headwinds for trade sentiment and inflation dynamics.
- Tourism and infrastructure: Nearly 6 million additional visitors expected in mid-2026, with infrastructure upgrades under way to handle higher passenger flows, supporting potential inflows.
Range
MXN to USD at 0.056796 is 3.1% above its 3-month average of 0.05507, having traded in a relatively stable 6.4% range from 0.053496 to 0.056895
MXN to EUR at 0.048438 is 2.4% above its 3-month average of 0.047293, having traded in a quite stable 5.2% range from 0.046468 to 0.048902
MXN to GBP at 0.042266 is 2.2% above its 3-month average of 0.041371, having traded in a quite stable 4.4% range from 0.040621 to 0.042394
MXN to JPY at 8.9834 is 4.7% above its 3-month average of 8.5813, having traded in a fairly volatile 9.5% range from 8.2185 to 8.9966
What could change it
- Data surprises on growth or inflation that shift Banxico policy expectations (e.g., faster inflation or growth could alter the rate path).
- Changes in US policy or global risk appetite influencing USD strength and EM flows.
- Developments in trade policy or tariff negotiations (e.g., rollbacks, escalations, or new trade arrangements) affecting sentiment and trade-led demand for MXN.
- Shifts in tourism/remittance patterns or additional fiscal/infrastructure measures impacting capital inflows.
