The Mexican peso inched higher against the dollar on Friday, extending a week of steady gains. It finished near 18.6014 per dollar, a 0.19% daily advance versus Thursday’s 18.6368, according to official figures. The move capped a weekly gain above 1.5%, helped by a softer greenback and rising bets that US interest rates will fall sooner rather than later.
Weak US data and changing rate expectations set the tone. Traders leaned into a view that the Federal Reserve will restart cuts, while Mexico’s central bank signaled a slower easing path. That combination kept the carry appeal intact and supported the peso through the week.
Peso to dollar exchange rate
Spot trading held in a tight band, with a high of 18.6373 and a low of 18.5465 during the session. By the close, the peso to dollar exchange rate sat near 18.60, reflecting a modest but broad-based improvement for the local currency.
The dollar index hovered around 98.27 during the day, a level that underscored the greenback’s mixed tone against major peers. Moves were limited, but the bias favored high-carry currencies like the peso.
Policy signals and rate expectations
Mexico’s central bank slowed its pace of easing on Thursday, trimming the policy rate by 25 basis points after a series of larger moves earlier this year. The decision, taken by a divided board, put the benchmark at a three-year low while signaling caution ahead. For the peso, a slower glide path helps preserve the interest-rate advantage that has attracted yield-seeking flows.
In the United States, President Donald Trump nominated Stephen Miran to the Federal Reserve Board following the departure of Adriana Kugler. Markets read the move as incrementally dovish for the near term, given Miran’s public support for additional easing and his alignment with the administration’s policy stance. The nomination kept attention on the path of US rates and the timeline for cuts, a key driver for dollar-bloc currencies.
Sell-side houses also leaned that way. VT Markets projected a gradual reduction of Mexico’s policy rate over the next year if core inflation keeps falling, a backdrop that still leaves the peso with a meaningful carry pickup versus the dollar. Under that scenario, analysts see USD/MXN trading broadly between 18.40 and 18.95, with scope to test 18.35 in a benign risk environment.
Outlook
The peso’s near-term path hinges on two forces pulling in opposite directions. A slower Banxico easing cycle supports the currency, but any sharp repricing of Fed cuts could swing the dollar quickly. Liquidity conditions will matter, too, as summer trading can amplify moves.
For now, the story is straightforward. Mexico’s rate premium remains attractive, and the peso to dollar exchange rate is holding near the mid-18s. A clean break below 18.55 would put 18.40 back in view. A rebound above 18.65 would ease the bullish bias and shift focus to 18.90.
On a weekly basis, USD/MXN retreated from last Friday’s 18.8886 to today’s 18.6014, a slide of about 1.54%. That drop mirrors the broader pressure on the dollar as investors reassess US growth, inflation, and policy risk into late summer.
