Mexican Peso Rises to July 2024 Highs

The Mexican Peso touched 18.16 against the USD, the highest since July 2024.

Over the past 4 weeks, US Dollar Mexican Peso lost 2.27%, and in the last 12 months, it decreased 10.07%.

The Mexican peso appreciated toward 18.27 per US dollar to test its strongest level since July 2024 amid a softening US dollar compounding with evidence of a resilient domestic labor market reinforced the case for Banxico to keep policy tight.

The US currency weakened on near certain bets of a Fed rate cut in December after mounting evidence of a softer US labour market.

Domestically the unemployment rate held at 2.6% in October which signals labour market resilience and lowers the likelihood of aggressive easing by Banxico.

Elsewhere, Mexico recorded its first trade surplus since June in October which eased external financing needs and trimmed direct dollar demand.

At the same time, Banxico trimmed year end inflation projections which strengthens the case that disinflation is underway and allows the central bank to preserve a positive real policy rate that sustains carry flows into the peso.

The Mexican peso appreciated past 18.32 per US dollar to test its strongest level since July 2024 as evidence of a resilient labor market reinforced the case for Banxico to keep policy tight.

Mexico's unemployment rate held at 2.6% in October of 2025, slightly above the 2.5% from a year earlier but below the expected 2.8% and still under the average of the past six months, a sign that employment conditions remain firm despite slower global activity.

That resilience pairs with the first trade surplus since June and Banxico’s downward revision of year end inflation expectations to 3.5% from 3.7%, a mix that strengthens Mexico’s external position and reduces fears of persistent inflation.

At the same time the US dollar weakened as markets increased bets on Fed easing in December, removing a major headwind for emerging market currencies and accelerating the peso’s recovery.

The Mexican peso strengthened toward 18.35 per US dollar as growing bets on a dovish US Fed after recent Fed commentary and softer US macro prints have pushed the market probability of a December 25bp cut into the mid 80s.

At the same time domestic policy has remained relatively supportive despite an easing cycle, with Banxico cutting the policy rate 25bp in early November to 7.25% and keeping guidance cautious and data dependent so that a meaningful yield cushion for peso assets persists.

That cushion has helped attract carry oriented flows even as Mexico’s economy shows strains, with Q3 GDP contracting 0.3% quarter on quarter and manufacturing activity noticeably softer, a combination that could narrow the interest rate premium if weakness deepens.

Traders are therefore balancing a weaker dollar and still positive carry against worsening growth metrics and a more conditional path for further easing.

The Mexican peso depreciated past 18.45 per US dollar, pulling back from July 2024 highs amid weaker domestic growth, a narrowing yield edge and a firmer US dollar.

Mexico’s economy contracted in the third quarter with GDP down 0.3% quarter on quarter and manufacturing activity notably weaker, signaling that growth and export volumes are softer than earlier assumed and that Mexico’s interest rate premium may not be sustainable.

The Bank of Mexico began easing in November with a 25 basis point cut to 7.25% and its minutes signaled a more cautious, data dependent path for further cuts which has trimmed the carry trade advantage that helped the peso rally.

At the same time delayed US labour data surprised to the upside with a larger payrolls print that reduced the odds of a near term Fed cut and strengthened the dollar.

Lingering trade and policy risks including tariff frictions with the US and uncertainty around the USMCA review amplify downside pressure.

The Mexican peso strengthened toward 18.45 per USD, closing in on July 2024 highs amid easing domestic inflation and a cautious outlook for the Bank of Mexico.

Headline CPI eased to 3.57% in October and core inflation retreated into the low fours.

Banxico’s 25 basis point cut to 7.25% carried a cautious, data dependent tone that signalled gradual easing rather than a shock to policy and reduced the odds of surprise moves.

Because the adjustment was widely priced the direct yield impact was muted so markets instead reacted through recalibrated risk premia and renewed carry flows that favoured peso assets.

Softer US growth signals and the ending of the longest government shutdown removed a safe haven bid for the dollar while mixed US data including initial jobless claims at 232,000 and continuing claims at 1.957 million and markets pricing roughly a 47% chance of a December Fed cut further trimmed dollar support and enhanced the relative appeal of Mexican paper.