Course history

The history of the Mexican peso exchange rate is complex and includes many factors, such as economic policy, the international situation, and Mexico's internal economic factors. In the 1950s and 1960s, the Mexican peso was relatively stable and its exchange rate against the U.S. dollar was fixed. In the 1970s and 1980s, Mexico experienced severe economic and currency crises, leading to the depreciation of the peso.

One of the most famous was the crisis in 1982, which was the result of m.in high foreign debt. In the 1980s and 1990s, the Brady Plan was introduced, which aimed to restructure its foreign debt and restore financial stability. This helped alleviate some of the exchange rate issues.

Unfortunately, despite this, Mexico experienced further currency crises, m.in. in 1994, when the so-called "Tequila Crisis" occurred. During this period, the peso lost a large part of its value. In the following years, Mexico took measures to stabilize the economy and currency. Structural reforms were introduced and inflation was contained. During the first two decades of the 21st century, the Mexican peso experienced some stabilization, although it was still vulnerable to fluctuations related to global economic events, such as the 2008 financial crisis.

Top currency pairs

Currency pairs with MXN are pairs that include the Mexican peso (MXN) and other currencies. Here are some popular currency pairs with MXN that you can trade on Webinar Universe:

• USD/MXN (US Dollar to Mexican Peso) — This is one of the most actively traded currency pairs in the forex market because it connects two major economies — the USA and Mexico;
• EUR/MXN (Euro to Mexican Peso) - While not as widely traded as USD/MXN, it is also an essential pair for investors following international relations and trade;
• MXN/JPY (Mexican Peso to Japanese Yen) – this pair could be interesting for investors who want to follow international relations and international trade from the perspective of Mexico and Japan;
• MXN/CAD (Mexican Peso to Canadian Dollar) - This pair reflects the trade relationship between Mexico and Canada and the volatility of commodity prices such as crude oil and metals, which can affect these currencies;
• GBP/MXN (British Pound vs Mexican Peso) – Although less popular than the above, the pair could still be of interest to investors following the UK-Mexico trading relationship and volatility in global markets.

Course Factors

Mexico is known for exporting commodities such as crude oil and metals, so changes in the prices of these commodities on global markets can affect the price of the peso. They translate into the country's export revenues.

For currency traders, the Mexican peso exchange rate is a key element due to the wide popularity of the currency and periodic fluctuations. The Mexican peso is highly susceptible to economic changes in the United States. In addition, the current price of crude oil has a significant impact on the value of the Mexican peso.

The peso exchange rate can also be vulnerable to the general sentiment in financial markets. In times of uncertainty, investors can move their funds to "safer" assets, which can affect the price of the peso. The monetary policy of Mexico's central bank, Banco de México, is also important, and in particular changes in interest rates, which strongly affects the value of the peso through the flow of foreign capital.

Future predictions

In recent months, the Mexican currency has surprised with regular increases. At the end of July 2023, it reached its highest level since 2015, but then a correction took place. Some analysts suggest that MXN could still gain in value. According to Bloomberg, the largest news agency in the world, the Mexican peso could become the leader among global currencies in 2024.

Although at first glance it seems to be an insignificant player in the foreign exchange market, it unexpectedly took first place, ahead of all the favorites in the ranking of effective exchange rates that we talk about on Webinar Universe.

In 2023, the peso has strengthened by as much as 15% against the US dollar, and this year it has gained an additional 1.8%. Currently, one dollar costs 16.69 pesos, which almost matches the record level.

Despite the optimistic forecasts, some experts suggest that the peso may be overvalued. Analysts at Deutsche Bank and Bank of America do not see a positive future for the currency. Nevertheless, the Mexican peso continues to follow this trend. The situation can be explained by the low volatility of the currency and very high interest rates.

In this context, the carry trade strategy, which involves borrowing in one currency and lending in pesos, becomes extremely profitable. In this way, the Mexican peso supports the global economy. Moreover, the possible return of Donald Trump to power in the US, which previously could have influenced the instability of the peso, may now strengthen it. The government is actively discussing escalating the trade war with China, suggesting more investment in neighboring Mexico. Despite the criticism, the Mexican peso continues to reach record levels, remaining a favorite of investors, as we talk about during online training.

In conclusion, the Mexican peso has been struggling with various factors in recent months, such as declining investor confidence, volatility in the currency market, and the impact of global economic trends. Still, the actions taken by the Central Bank to stabilize the currency may provide prospects for its future. For investment purposes, it will be crucial to continue monitoring Mexico's economic situation, monetary policy developments and response to changing global conditions.