Puerto Vallarta, Mexico – The Mexican peso ended the day on December 26, 2024, on a downward note, failing to maintain the positive momentum with which it had begun. The peso closed the session at an average of 20.21 against the US dollar, reflecting a 0.23% decline from the previous day, when it stood at 20.16 pesos to the dollar.
Despite this setback, the peso’s performance over the last week has shown some resilience, with the dollar rising by 0.68% compared to its value a week ago. Looking at a broader timeframe, the peso has depreciated by 18.29% over the past year, a trend that reflects ongoing volatility in the exchange rate.
The decline on December 26 interrupted a brief period of negative market behavior observed in the previous two days. The volatility during the past week has been significantly lower than the fluctuations seen last year, which reached a high of 12.37%. This suggests that, despite the recent drop, the peso has displayed relatively stable behavior compared to the more erratic trends in 2023.
The peso-dollar exchange rate has seen considerable contrasts throughout 2024. The year began with the Mexican currency strengthening, with the dollar reaching a low of 16 pesos per unit—a level not seen in nearly a decade. This surge earned the peso the moniker “superpeso,” as it outperformed expectations and became one of the strongest currencies in emerging markets.
However, the peso’s positive performance was short-lived, as it began to depreciate due to several political developments, including the controversial Judicial Branch Reform and the elimination of key autonomous bodies in Mexico. These decisions, along with shifting economic dynamics, particularly in the United States, put downward pressure on the peso.
The situation worsened with the resurgence of political tensions, particularly during the election campaign of former US President Donald Trump. His threats to impose tariffs on Mexican and Canadian products if Mexico did not address security concerns at the border exacerbated the downward pressure on the peso, pushing the exchange rate back to 20 pesos to the dollar.
Looking ahead, Mexico’s central bank (Banxico) has forecast that the dollar will trade at an average of 20.24 to 20.69 pesos in 2025. This conservative outlook accounts for the anticipated impact of Trump’s statements and policies, which are expected to continue influencing the exchange rate.
On the domestic front, inflation in Mexico has remained relatively stable in 2024, averaging around 4%, although it briefly surged to nearly 6% in June. Banxico expects inflation to dip below four percent by the end of the year, with a forecast of 3.8%. However, economic growth projections remain modest, with Banxico anticipating a GDP growth rate of just 1.2% for the year.
Puerto Vallarta, Mexico - The Mexican peso ended the day on December 26, 2024, on a downward note, failing to maintain the positive momentum with which it had begun. The peso closed the session at an average of 20.21 against the US dollar, reflecting a 0.23% decline from the previous day, when it stood at 20.16 pesos to the dollar.