The Mexican peso has strengthened to around 16.95 per US dollar after advancing for five consecutive weeks. This sustained appreciation has been driven primarily by broad-based weakness in the US dollar on international markets and by expectations surrounding the Federal Reserve’s monetary policy path, which continue to support a wide interest-rate differential.
The Bank of Mexico has maintained its policy rate at 6.50%. Compared with the stance of other emerging-market central banks, this relatively high rate has provided significant support for the peso. At the same time, steady capital inflows into Mexican assets have further underpinned the currency.
Mexico has also benefited from the escalation of trade tensions between the United States and Canada, which has placed the country in a comparatively more favorable position in its trade relationship with the US. In parallel, Mexico’s annual core inflation rate eased to 3.93% in the first two weeks of August 2026, its lowest level since the first half of April 2025.
