Read our related article on why the Mexican peso remains a global currency outperformer.

peso - Currency depreciation, %

Amid currency depreciations throughout emerging markets, the peso stands out as a resilient outlier

Although Andres Manuel Lopez Obrador’s (AMLO’s) nationalist energy policies have been causing tensions within the USMCA and led to a small fallout in the peso, FrontierView expects the Mexican currency to remain stable. We believe AMLO’s commitment to fiscal stability coupled with tightening monetary policy will keep the peso as one of the most stable currencies across emerging markets. Hence, our forecasts place the peso at a 20.5 MXN/USD average for 2022, slightly appreciating to 19.9 in 2023. Firms should anticipate a strong Mexican currency in the short to medium term, particularly vis-à-vis other Latin American currencies, helping to sustain the purchasing power of Mexican consumers. The peso is likely to remain resilient amid a volatile environment, but firms should bear in mind that global headwinds, along with domestic uncertainty stemming from AMLO’s policies, will continue to impact FX movements; therefore, they should keep using scenario planning as they gauge their pricing strategy for 2023.


Over the last few months, the US dollar has appreciated to its strongest level in decades. The currency even hit parity with the euro for the first time since 2002. Not surprisingly, emerging markets have been under severe pressure after the Federal Reserve enacted two consecutive hikes, moving the interest rate target to 2.25–2.5%. The Colombian peso, for example, devalued more than 10%, coinciding with Gustavo Petro’s arrival to the office of the president. While the Peruvian sol and the Brazilian real saw bigger gains year-to-date, the Mexican peso has been more stable throughout the year and slightly appreciated in Q2, trading at MXN 19.84 per dollar as of August 15. 

Our View

After AMLO’s election, the business sentiment was that the Mexican peso was going to weaken given his left-leaning views. However, the president’s commitment to fiscal stability has maintained the country’s finances in balance, without incurring in higher deficits and unsustainable debt levels that would have hurt the peso. Banxico’s hawkish monetary policy, increasing interest rates from 4% in June 2021 to 8.5% in July 2022, has helped the peso vis-à-vis the US dollar. These hikes started nine months before the US Fed raised its rates for the first time. Additionally, higher USD inflows in the form of exports, oil revenues, and remittances have buttressed the Mexican peso.

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