During the first half of 2024, the Mexican peso remained stable around 17 pesos, thanks to the high interest rates from the Bank of Mexico that kept the carry trade attractive. However, in the second half of 2024, the situation changed drastically with a strong depreciation against the US dollar.
"The exchange rate could skyrocket to 23 pesos, even more, if it prolonged for several months," mentioned the President of Mexico, Claudia Sheinbaum, while announcing a pause in the implementation of tariffs. Despite this measure, the Mexican peso closed at 20.48 pesos per dollar on February 4, reflecting persistent uncertainty and the possibility of increased pressure in the coming months.
In economic terms, this weakening of the peso has a mixed effect on the Mexican economy. According to data from the Bank of Mexico, the peso rose from trading at 17.15 pesos per dollar in February 2024 to 20.52 pesos in February 2025, representing a loss of 19.6% of its value in one year. Both internal and external factors contribute to this depreciation, where political uncertainty in Mexico due to structural reforms is one of the main reasons, according to Gabriela Siller, director of Economic Analysis at Grupo Financiero Base.
Over the past year, the exchange rate of the peso has fluctuated between 16.26 and 21.29 pesos per dollar, influenced by an uncertain electoral context in the US, threats of tariffs from Donald Trump, and signs of economic slowdown in Mexico. The threat of imposing new tariffs on Mexican products by Trump also had a significant impact on the peso-dollar quote, negatively affecting consumers and benefiting exporters.
The evolution of the exchange rate in the coming months will largely depend on the economic policies of the United States and Mexico, as well as the decisions of Banxico regarding interest rates.
