The Mexican peso got an early Christmas bonus, reaching its best level in 17 months, boosted by a retreat of the dollar and a greater appetite for emerging market assets.
According to data from Mexico’s central bank (Banxico), the currency appreciated 0.25% against the greenback, closing on Thursday at 18.23 units per U.S. dollar, a level not seen since July 23, 2024, when it traded at 18.17.
The peso had strengthened to 18.19 to the U.S. dollar by 11:30 a.m. Friday, Mexico City time.
According to data from Banxico, the exchange rate traded Thursday between a high of 18.2570 and a low of 18.2250 in the wholesale market. The Banco Base analysis team reported that the Mexican peso was the third-best performing currency in Thursday’s session.
The newspaper El Financiero reported that expectations about the next U.S. Federal Reserve monetary policy meeting — scheduled for Dec. 9-10 — contributed to the peso’s performance.
Analysts have projected that the Fed will cut its key interest rate next week in hopes of boosting the faltering U.S. job market, raising concerns that lower borrowing costs could stoke inflation.
The newspaper El Economista reported that the dollar’s decline comes as traders assess data from the U.S. Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation benchmark, which rose 0.3% in line with expectations.
Financial markets were said to be pricing in an 87% chance the Fed would reduce its key interest rate by a quarter-point, which would be its third rate cut in as many meetings.
Felipe Mendoza, CEO of IMB Capital Qants, told El Financiero that the appreciation of Mexico’s currency on Thursday indicates that “despite global volatility and geopolitical noise, the structural support of the peso remains in place thanks to an attractive carry, the expectation of a Fed cut … and domestic financial stability.”
An “attractive carry” refers to an investment (like a bond or currency) that offers a high, steady income stream (also referred to as “the carry”) relative to its cost, allowing investors to profit just from holding the asset as time passes.
#AlSonarLaCampana | El peso mexicano ganó terreno frente al dólar. El #TipoDeCambio se situó en 18.23 pesos por billete verde.
📺: @TonyAguirre10 pic.twitter.com/Cet8yEkvAC— El Financiero (@ElFinanciero_Mx) December 4, 2025
The Mexican peso has appreciated 12.7% against the U.S. dollar so far in 2025, but analysts are already turning their attention to 2026 when Fed chairman Jerome Powell will step down in May.
Friday’s market is likely to be impacted by today’s first-ever meeting between Mexican President Claudia Sheinbaum and her U.S. counterpart, Donald Trump, which could strengthen what is viewed as a good relationship.
With reports from El Economista, La Jornada and El Financiero
