Mexico’s Peso Forecast to Remain Stable Within Long-Standing Range

The Mexican peso is expected to continue trading within a long-established range of between 16.00 and 22.00 pesos per U.S. dollar throughout 2026, according to a recent poll conducted by Reuters. This trading range, which the peso first entered in July 2015, has seen an average mid-point of 19.20 pesos, with only a brief period above 22.00 during the peak of the COVID-19 pandemic in 2020.

The median estimate from 22 analysts surveyed between November 28 and December 3 suggests that the peso will depreciate 3.4% over the next year, forecasted to reach 18.92 pesos per dollar from a current value of 18.27. Despite this slight decline, the currency will remain near the center of its decade-old trading range.

Economic Factors Influencing the Peso

Christian Admin de la Huerta Avila, an economist at Finamex, indicated that the risks surrounding the peso’s forecast are largely balanced, though they lean slightly towards depreciation. This outlook is influenced by recent indicators of slowing economic activity, less robust remittances, and the potential for widening differences between the Bank of Mexico, known as Banxico, and the U.S. Federal Reserve.

The expectation is that Banxico will maintain a gradual easing of its monetary policy, while the Federal Reserve may reconsider further rate cuts following an anticipated adjustment this month. A divided stance within the Fed could lead to diminishing interest rate differentials, which currently favor the peso, thereby prompting traders to bet against the currency.

Comparative Currency Forecasts

When asked about potential risks to their forecasts, out of 11 foreign exchange strategists, five anticipated a weaker peso, three expected a stronger performance, and three maintained a neutral outlook. This sentiment reflects the broader context of currency fluctuations across the region.

In comparison, Brazil’s real is projected to weaken by 3.1% to 5.50 per dollar over the next year, down from 5.33 currently. Year-to-date, the Brazilian currency has appreciated by 15.9%, with expectations for it to settle at 5.38 by the end of 2025, marking a significant gain that would represent the largest rise since 2016.

The Mexican peso itself has gained 13.9% thus far in 2025, with a projected annual appreciation of 12.5%, which would be its strongest annual performance since a 14.9% rise in 2023.

As the currency markets evolve, the Mexican peso’s trajectory will likely continue to reflect both domestic economic conditions and international monetary policy trends.