Puerto Vallarta, Mexico – The Mexican peso closed 2024 with a significant loss against the US dollar, marking its steepest annual decline since the 2008 financial crisis. The currency ended the year at 20.8829 pesos per dollar, reflecting a depreciation of 23.08% compared to the previous year’s closing rate of 16.9666, according to data from the Bank of Mexico. This represents a fall of 3 pesos and 91 cents over the course of the year.
Throughout the year, the peso experienced wide fluctuations, ultimately pushing the exchange rate above 20.80 in the absence of significant economic indicators and amid investor uncertainty. The dollar peaked at 20.9080 pesos on December 31, surpassing the 20.83 high recorded after Donald Trump’s 2016 electoral victory. This climb came after the peso had reached an eight-year low of 16.2602 in April.
A Shift from Superpeso to Depreciation
At the start of 2024, the Mexican peso was the strongest-performing currency globally against the dollar. However, the conditions that propelled the so-called “superpeso” began to fade as the year progressed, leaving the local currency exposed to external pressures and domestic uncertainties.
“The aligned stars that allowed us to enjoy the superpeso have been fading away, and this has taken the local currency from 16.26 to 20.80 in the interbank market,” said Juan Carlos Cruz Tapia, a financial consultant. He anticipates a challenging 2025 driven by geopolitical tensions and policy changes during Donald Trump’s second presidential term.
“It will be a year of strong challenges due to geopolitical escalations, and the decisions taken at the beginning of Donald Trump’s second term could have a strong influence. Caution will be required in the event of expectations materializing or deviating.”
Interest Rates, Elections, and Political Shifts
One of the key factors bolstering the peso at the start of 2024 was the Bank of Mexico’s high interest rate policy, which reached a record 11.25%. However, the central bank has since implemented rate cuts, lowering it to 10%, with further reductions anticipated. This easing of rates has contributed to the peso’s depreciation as carry trade operations – which benefit from high-rate differentials – began to unwind.
Beyond interest rates, political and electoral developments played a pivotal role in driving the peso’s volatility.
“Interest rates and the US election are factors that of course gave the exchange rate an upward push. However, the key factor was Morena’s victory in Congress,” said Humberto Calzada, chief economist at Rankia Latam.
“Morena’s electoral victory, not only in the Presidency but also in Congress, and its consequences such as the Judicial Reform are the main factors of uncertainty among operators with respect to Mexico, above Trump,” Calzada added.
The ruling Morena party’s dominance in Mexico’s 2024 general elections heightened investor concerns about potential judicial reforms and broader institutional changes. This contributed to market jitters and further currency depreciation.
Looking Ahead to 2025
As the new year begins, investors are closely watching economic indicators, including inflation, growth, interest rates, and US labor market data. The Federal Reserve’s monetary policy decisions will also play a crucial role in shaping the peso’s performance.
Relations between Mexico and the United States, along with trade dynamics involving China and potential Middle East conflicts, are expected to influence exchange rates in 2025.
“Operators will continue to monitor external factors and domestic political developments. Any resurgence of tensions or new policy shifts could push the dollar above 22 pesos,” Calzada warned.
On the technical front, the peso registered a loss of 22.5 cents or 1.09% on the last trading day of 2024, with the official rate closing at 20.6579 pesos per dollar, according to the Bank of Mexico. Analysts at Vector predict the next resistance levels for the peso to be between 21 and 21.20 per dollar.
The peso’s performance in 2025 will be contingent on multiple variables, and market analysts are urging caution as Mexico navigates an increasingly complex economic landscape.
Puerto Vallarta, Mexico - The Mexican peso closed 2024 with a significant loss against the US dollar, marking its steepest annual decline since the 2008 financial crisis. The currency ended the year at 20.8829 pesos per dollar, reflecting a depreciation of 23.08% compared to the previous year’s closing rate of 16.9666, according to data from the Bank of Mexico. This represents a fall of 3 pesos and 91 cents over the course of the year.
