Mexico’s peso hit its strongest level since May 2024 this week, trading around 16.89 per US dollar as the currency’s revival as a “super peso” extends a remarkable rally that has defied expectations of weakness. The peso has surged nearly 20% against the dollar since January 2025, making it one of the best-performing emerging market currencies despite sluggish economic growth and lingering trade tensions with Washington.
The unexpected strength caught Mexico’s central bank and Wall Street forecasters off guard. At the start of 2025, both expected the peso to weaken toward 21 per dollar, according to Reuters reporting. Instead, the currency has staged a dramatic recovery that has revived talk of a “super peso”—a term used to describe periods of outsized peso strength.
Several factors are driving the rally. A softer US dollar, which has shed more than 10% against major currencies in 2025 and largely stabilized this year, provides the backdrop. Carry-trade flows have also surged, with investors drawn to Mexico’s relatively high interest rates—around 7% at the central bank’s benchmark rate—compared with about 3.75% for the US Federal Reserve. This interest rate differential has made the peso attractive for leveraged trades, according to Reuters analysis.
Beyond dollar weakness and rate differentials, domestic factors are supporting the peso. Mexico is increasingly viewed as a beneficiary of the global AI boom, with computer server exports reaching nearly $83 billion in the first half of 2026, highlighting the country’s growing role in higher-value manufacturing. Lower trade-risk premia and political stability have also bolstered investor confidence in Mexican assets.
The strength, however, is creating a squeeze for Mexican exporters. Companies including Becle (maker of José Cuervo tequila), bread producer Grupo Bimbo, Carlos Slim’s Grupo Carso, and others reported that currency appreciation weighed on their performance in recent quarters, according to Reuters. More than 80% of Mexico’s exports go to the United States, exposing many companies to the dual challenge of a stronger home currency and a single-market dependency.
Yet the impact remains difficult to spot in broader export data. Valeria Moy, director of the Mexican Institute for Competitiveness, told Reuters that “exports keep growing impressively” despite the peso’s appreciation, suggesting that other factors—such as nearshoring and tech-sector growth—may be offsetting currency headwinds for many firms.
The rally carries risks. Speculative positioning in currency futures markets has reached levels approaching the highest seen since early 2023, according to US Commodity Futures Trading Commission data cited by Reuters. If hedge funds and short-term traders begin unwinding long positions, the peso could face a sharp reversal. More broadly, trade policy uncertainty remains the biggest drag on the outlook. The Trump administration’s decision to forgo renewal of the USMCA trade pact in favor of annual reviews has left the agreement in force but prolonged uncertainty over its future, creating a ceiling on how far investor confidence can extend.
Looking ahead, the peso’s trajectory will depend on whether the current rally reflects genuine economic strength or primarily speculative positioning. The currency’s near-20% surge since January 2025 is extraordinary by any measure, but so too is the concentration of that gain among fast-money traders rather than long-term institutional investors, who have largely stayed away since Mexico’s 2024 election, according to Marco Oviedo, an economist at XP Investments.
Sources
- Reuters — peso strength drivers, carry trades, exporter impact, USMCA uncertainty, and speculative positioning
- Trading Economics — peso exchange rate at 16.89 per dollar in September 2026
- Yahoo Finance — peso appreciation of 22% in 2025, nearshoring and interest rate factors
- LSEG data via Reuters — peso surge of nearly 20% since January 2025
