Puerto Vallarta, Mexico – The Mexican peso depreciated on Tuesday, closing the year with its worst performance since the 2008 financial crisis. On the final day of trading for 2024, the peso traded at 20.7510 units per dollar, marking a 0.55% decline compared to Monday’s reference price. This decline extends a four-day losing streak for the currency during a low-liquidity holiday period.
The peso’s performance caps a tumultuous year characterized by heightened political uncertainty, as presidential elections in both Mexico and the United States heavily influenced market sentiment. Although the peso began 2024 as one of the strongest-performing currencies globally, it saw a dramatic shift in June following Mexico’s local elections. The ruling government secured a landslide victory, initiating a wave of controversial reforms that markets perceived as detrimental to the country’s business environment.
Market analysts have attributed the peso’s sustained decline to investor skepticism regarding the government’s economic policies and reform agenda. The uncertainty deepened further after Donald Trump’s electoral victory in November, raising fears of renewed protectionist measures from the United States, Mexico’s largest trading partner. Trump’s previous presidency saw heightened trade tensions between the two countries, and investors now anticipate potential disruptions to Mexico’s economic stability.
The peso’s cumulative depreciation of approximately 22% for the year places it among the weakest performers globally, surpassed only by the Brazilian real and the Argentine peso. Analysts suggest that Mexico’s reliance on trade with the United States makes it particularly vulnerable to policy shifts under Trump’s leadership, intensifying capital outflows and speculative trading against the peso.
“We are witnessing the intersection of domestic policy shifts and external geopolitical pressures, which has significantly undermined investor confidence in the peso,” said Ana Rojas, a senior economist at Banco Nacional. “Markets are pricing in not just short-term uncertainty but longer-term risks tied to U.S.-Mexico trade relations.”
The peso’s volatility throughout the year reflects broader trends in emerging markets, many of which have faced pressure from global economic slowdowns, rising interest rates in developed economies, and political uncertainty. However, Mexico’s situation stands out due to its proximity to the United States and the integrated nature of its manufacturing and export sectors.
Despite the peso’s decline, Mexico’s government remains optimistic about the long-term resilience of the country’s economy. In a year-end address, Finance Minister Luis Mendoza emphasized the administration’s commitment to fiscal stability and ongoing dialogue with U.S. counterparts to mitigate potential trade disruptions.
“Mexico’s economic fundamentals remain strong, and we are confident that our reforms will yield positive results in the medium to long term,” Mendoza stated. “We are prepared to engage in productive discussions with the incoming U.S. administration to safeguard our trade relations.”
The peso’s trajectory in the coming months will likely hinge on the government’s ability to restore investor confidence and navigate potential policy changes from the U.S. With 2025 on the horizon, market watchers are closely monitoring developments in both countries, aware that economic stability in Latin America’s second-largest economy could be at stake.
Puerto Vallarta, Mexico - The Mexican peso depreciated on Tuesday, closing the year with its worst performance since the 2008 financial crisis. On the final day of trading for 2024, the peso traded at 20.7510 units per dollar, marking a 0.55% decline compared to Monday’s reference price. This decline extends a four-day losing streak for the currency during a low-liquidity holiday period.
