Mexican Peso Falls on Geopolitical Fears, Posts Weekly Loss of 1.20%

Quick overview

The Mexican peso weakened against the U.S. dollar on Friday, marking its fourth consecutive day of losses, driven by rising concerns over the ongoing conflict between Israel and Iran and uncertainty over how directly the United States will become involved.

The exchange rate closed the day at 19.1683 pesos per dollar, according to official data from Banco de México (Banxico). Compared to Thursday’s close of 19.0416, the peso depreciated by 12.67 centavos, or 0.67%.

During the session, the dollar traded in a range between 19.0082 and 19.1918 pesos. Meanwhile, the U.S. Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, edged up 0.03% to 98.82.

Geopolitical Tensions Weigh on Sentiment

The conflict between Israel and Iran has now entered its second week, and market participants remain cautious, awaiting clarity from President Donald Trump on whether the U.S. will join the aerial strikes against Iran.

Israel has continued its missile campaign against Iran’s nuclear facilities, aiming to prevent the Islamic Republic from developing a nuclear bomb. Iran insists it has no such intentions, while Trump has publicly demanded Iran’s “complete surrender.”

Compared to last Friday’s close of 18.9396 pesos, the local currency posted a weekly loss of 22.87 centavos, or 1.21%, largely driven by geopolitical uncertainty. According to a note from Vector Análisis, further depreciation toward 19.30–19.40 pesos per dollar cannot be ruled out.

Fed Policy and Inflation in Focus

Also weighing on markets this week was the U.S. Federal Reserve’s monetary policy announcement. As expected, the Fed kept interest rates unchanged, but warned of potential short-term inflationary pressures stemming from newly imposed tariffs.

On the domestic front, investors are bracing for key inflation data and Banxico’s policy decision next week. Markets widely anticipate that Mexico’s central bank will deliver a 50-basis-point rate cut on Thursday.

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Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

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