Mexican peso Strengthens, expected to Reach 17.65 Units Per Dollar in 2026
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The Mexican peso is experiencing a period of strength, bolstered by a weakening U.S. dollar, easing trade tensions with the United States, and lower-than-expected inflation in Mexico. Analysts predict this positive trend will continue, with some forecasting the peso could reach 17.65 units per dollar in the first quarter of 2026. This marks a significant turnaround from the peso’s earlier depreciation in 2025 due to U.S. tariff concerns.
Current Peso-Dollar Exchange Rate
As of December 24, 2025, financial analysts expect the peso to remain stable, fluctuating between 17.90 and 17.94 pesos per dollar at the close of the session. This stability is attributed to a combination of factors, including the upcoming holiday and a light economic data calendar for Friday. Monex Analysis
Factors Driving Peso Appreciation
Several key factors are contributing to the Mexican peso’s recent gains:
* Federal Reserve Liquidity Injections: The U.S.Federal Reserve has injected $30 billion into the market as it’s December 10th monetary policy decision,aiming to ensure the smooth functioning of monetary policy. This influx of liquidity has weakened the dollar, directly benefiting the peso. reuters – Fed Injections
* Declining Inflation in Mexico: Inflation in Mexico slowed to 3.72% during the first week of December, falling below market expectations. This data suggests the Bank of Mexico may pause its cycle of interest rate cuts, currently at 7%, further supporting the peso. INEGI – inflation data
* Resolution of Trade Tensions: The easing of trade tensions between Mexico and the United States has removed a significant headwind for the Mexican economy and its currency.
Analyst Predictions
Gabriela Siller,Director of Analysis at Banco base,believes the peso will continue to appreciate due to the weakened dollar. She predicts the currency could reach 17.65 pesos per dollar in the first quarter of 2026. Banco Base
Monex analysts also anticipate a positive outlook, noting the peso is closing the year with a “golden brooch” – a strong finish contrasting with the earlier depreciation caused by U.S. tariffs.
Key Takeaways
* The Mexican peso is currently trading in a stable range of 17.90-17.94 pesos per dollar.
* Federal Reserve liquidity injections are weakening the U.S. dollar.
* Lower-than-expected inflation in Mexico is supporting the peso.
* Analysts predict the peso could reach 17.65 pesos per dollar in the first quarter of 2026.
* Easing trade tensions between Mexico and the U.S. are contributing to the peso’s strength.
Looking Ahead
The Mexican peso’s performance will continue to be influenced by U.S. monetary policy, global economic conditions, and domestic factors like inflation and interest rates. The current trajectory suggests a continued period of strength for the peso, but ongoing monitoring of these factors will be crucial to assess the long-term outlook.