FX.co ★ Mexican Peso Pressured by Strong USD

The Mexican peso has weakened beyond 18 per US dollar due to a significant surge in the US dollar, overshadowing domestic supports that had bolstered the currency for much of 2025. US military actions in Venezuela significantly increased the demand for the dollar and caused investors to devalue currencies regarded as regional representations of Latin American risk. Domestically, the Bank of Mexico's policy easing in late December reduced the yield advantage that had supported the peso during its robust rally earlier in the year, leaving it more vulnerable when the dollar gained strength. Additionally, remittances and other secondary income inflows, which usually provide a consistent flow of dollars, have declined in 2025, weakening a crucial structural source of foreign exchange demand and exacerbating depreciation when global influences are unfavorable. These pressures are somewhat mitigated by an improved external position by mid-2025, as a shift towards a current account surplus reduces balance of payments stress and helps prevent more severe depreciation of the peso.