Mexican Peso Strengthens Against the Dollar After Inflation and GDP Data
On the domestic front, Mexico’s economy grew 0.8% year-over-year in the first quarter of 2025, according to final data from INEGI.
Quick overview
- The Mexican peso appreciated against the U.S. dollar, closing at 19.3121 pesos per dollar, marking a 0.31% increase.
- Investors are concerned about President Trump's tax and spending reform bill, which could significantly increase the national debt.
- Mexico's economy grew 0.8% year-over-year in Q1 2025, avoiding a technical recession, while inflation rose to 4.22%, exceeding Banxico's target.
- The peso has remained around the 19.30 support level, with expectations of further interest rate cuts from Banxico.
The Mexican peso appreciated against the U.S. dollar on Thursday, resuming an upward trend in a market reacting to both local economic indicators and progress on U.S. fiscal legislation proposed by President Donald Trump.
The exchange rate closed the session at 19.3121 pesos per dollar. Compared to Wednesday’s official rate of 19.3716 from the Bank of Mexico (Banxico), this represented an appreciation of 5.95 centavos, or 0.31%.
During the session, the dollar traded within a range of 19.2895 to 19.4603 pesos. Meanwhile, the U.S. Dollar Index (DXY) from the Intercontinental Exchange — which measures the dollar against a basket of six major currencies — was up 0.32% at 99.93 points.
Uncertainty Around U.S. Fiscal Policy
Investors remain uneasy about President Trump’s controversial tax and spending reform bill. After prolonged debate, the proposal passed the House of Representatives and now heads to the Senate for review and potential approval.
Some analysts in the U.S. have warned that the bill could add between $3 trillion and $5 trillion to the national debt. These concerns have intensified following a sovereign credit rating downgrade by Moody’s last Friday.
Local GDP and Inflation
On the domestic front, Mexico’s economy grew 0.8% year-over-year in the first quarter of 2025, according to final data from INEGI. This result was in line with the preliminary estimate released a few weeks ago. Seasonally adjusted, the economy expanded 0.2%, helping the country avoid a technical recession.
Regarding inflation, INEGI reported a 0.09% increase in consumer prices during the first half of May — significantly above the market’s expected drop of 0.13%. On an annual basis, inflation accelerated to 4.22%, above Banxico’s target range.
Technical Outlook
On Tuesday, the peso reached its strongest level against the dollar since October, at 19.24 per dollar. Since then, it has hovered around the 19.30 support level, awaiting new data that could push it toward the next key level of 19, supported by ongoing dollar weakness in global markets.
For now, investors expect Banxico to continue cutting interest rates, following last week’s 50 basis-point reduction. In the U.S., the market’s focus remains on growing concerns over federal debt and fiscal sustainability.
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