The Mexican peso appreciated against the US dollar for a fourth consecutive trading day on Wednesday to close at its strongest position in 2025.
The peso closed at 18.53 to the greenback on Wednesday, according to the Bank of Mexico (Banxico), an appreciation of around 0.6% compared to its closing position on Tuesday.
The last time the peso was stronger was in August 2024.
By the close of trading on Wednesday, the peso had appreciated around 1.2% compared to its closing position last Thursday.
In 2025, the currency has gained more than 11% against the greenback. On the first trading day of the year, Jan. 2, the peso closed at 20.62 to the dollar, according to Banxico.
On Thursday morning, the peso weakened slightly to trade at 18.56 to the dollar at 9 a.m. Mexico City time, according to Yahoo! Finance.
On Wednesday, the peso got a boost from increased market optimism following U.S. President Donald Trump’s announcement that he had reached a trade deal with Japan.
El tipo de cambio alcanza un nuevo mínimo en el año 18.5285 pesos por donar, no visto desde el 1 de agosto de 2024. pic.twitter.com/OUp0Iyukdz
— Gabriela Siller Pagaza (@GabySillerP) July 23, 2025
Gabriela Siller, director of economic analysis at Mexican bank Banco Base, said that the peso could appreciate further if Banxico pauses its rate-cutting cycle and signals a more restrictive monetary policy stance moving forward.
The central bank’s key interest rate is currently set at 8.0% after a 50-basis-point cut in late June, the fourth consecutive cut of that magnitude in 2025. Banxico’s governing board will hold its next monetary policy meeting on Aug. 7.
The peso generally benefits from a higher interest rate in Mexico relative to the United States Federal Reserve’s federal funds rate, which is currently set at a 4.25%-4.50% range.
Another factor that could affect the MXN-USD exchange rate in the near term is the outcome of ongoing trade negotiations between Mexico and the United States.
In a July 11 letter, Trump informed President Claudia Sheinbaum that on Aug. 1, he would impose a 30% tariff on “Mexican products sent into the United States, separate from all Sectoral Tariffs,” which currently apply to steel, aluminum and vehicles.
A deal between Mexico and the U.S. that stops the proposed 30% tariff from taking effect could give the peso an additional boost, and perhaps propel the currency to a new 2025 high.
With reports from El Economista
