The Mexican peso strengthened past 18.65 per USD in July, its strongest level since mid-August 2024, driven by stronger external inflows, a softer US dollar and a still-restrictive domestic monetary stance. Externally, June’s unexpectedly large US fiscal package and Trump’s looming tariff deadline have dented the dollar, while Mexico’s trade surplus of $1.03 billion in May, and record remittances topping $5.5 billion have kept hard currency flowing into the country.
Domestically, Banxico’s June 26th decision to cut its key rate by 50 bps to 8%, while reiterating that further reductions will await solid disinflation, has preserved an attractive real interest rate, anchoring peso-yield differentials. Moreover, with unemployment at a decade-low 2.7% and Mexico’s PMI at 46.3 in June still outpacing most of the region, the peso has benefited from resilient growth indicators.
