Peso Strengthens 2.3%, Hits Record Under Sheinbaum as USD Weakens

The Mexican peso closed last week at its strongest level since President Claudia Sheinbaum took office, appreciating 2.30% amid a weakening US dollar driven by ongoing trade tensions between the United States and China.

According to data from Mexico’s Central Bank (Banxico), the peso ended Friday at MX$19.2398 per US dollar, gaining 0.37% (7.23 cents) in a single day. This marks its best closing level since September 17, 2024, when it reached MX$19.1399.

Following Sheinbaum’s inauguration, the exchange rate peaked at MX$21.8829 per dollar on December 31, 2024.

The US Dollar Index (DXY), which measures the dollar against six major currencies, declined 2.06% to 99.10 points during the same period. Other global currencies also gained, including the Russian ruble (17.05%), Swedish krona (7.21%), Brazilian real (7.14%), and euro (4.75%).

At the end of 2024, the peso weakened due to a stronger dollar, bolstered by US economic performance that exceeded International Monetary Fund (IMF) forecasts and a moderate rate-cutting cycle by the Federal Reserve. Additional pressures included declining commodity prices, heightened geopolitical risks, and reduced global appetite for riskier assets.

In 2025, the peso traded within a downward-sloping channel, supported by dollar weakness and the relative resilience of the Mexican currency, according to a Monex report. Analysts attribute this strength to the potential resolution of US-Mexico trade issues and easing global trade tensions.

However, risks remain, including judicial elections, possible trade disputes, and the threat of sovereign credit rating downgrades, all of which could undermine speculative support for the peso and push the exchange rate higher.

Speculative interest in the peso has surged. Data from the Chicago futures market indicates net long positions—bets on the peso’s appreciation—have risen by 404% since Sheinbaum took office. As of May 25, 2025, there were 62,500 contracts favoring the peso, compared to 12,400 on Sep. 27, 2024.

“The peso remains one of the most attractive emerging market currencies for carry trade strategies, thanks to its interest rate differentials and Mexico’s relative macroeconomic stability,” said Felipe Mendoza, market analyst, ATFX LATAM.