The Mexican peso has accumulated a 13.9% appreciation in 2025, its best performance since 1994, driven by dollar weakness and solid local factors. Despite a moderate depreciation on December 29, the exchange rate remains stable amid low trading volume due to year-end holidays. Analysts forecast volatility in 2026 from monetary policies and trade reviews.
The Mexican peso is on track to close 2025 with its largest annual gain since December 1994, when it began free floating. According to Banco de México data, the currency has appreciated 13.9%, thanks to the weakness of the US dollar, whose DXY index has fallen 9.6% this year due to expectations of lower growth and interest rates in the US.
Gabriela Siller, director of analysis at Banco Base, highlights three key factors: “The weakness of the dollar, carry trade operations, and the increase in silver prices.” Additionally, trade among BRICS countries without using the dollar has reduced demand for the US currency. Carry trade operations favor Mexico due to the interest rate differential with the US and a lower-than-expected risk perception, despite Trump's tariff measures.
In the week before December 29, the peso extended its fifth consecutive streak of gains since January 2024, closing at 17.8930 pesos per dollar, a 0.59% appreciation. However, on Monday the 29th, it recorded a moderate 0.4% depreciation to 17.9682 pesos per dollar, attributed to low trading volume from holidays, according to Felipe Mendoza, CEO of IMB Capital Quants: “For investors, this suggests the foreign exchange market is more influenced by seasonal factors than fundamentals.”
Gerónimo Ugarte Bedwell, chief economist at VALMEX Casa de Bolsa, explains that the trend responds to a solid supply of foreign currency from exports, high remittances, and expanding tourism. For 2026, Andres Abadia of Pantheon Macroeconomics anticipates volatility from Banxico rate cuts, political risks, and the T-MEC review, potentially leading to moderate depreciation.
In bank windows, Banamex reports the dollar at 18.42 pesos for sale and 17.42 for purchase. The DXY index fell 0.01% to 98.09, while the BBDXY rose 0.04% to 1,201.49 points.
