Exchange Rate Calculator

The exchange rate between the U.S. Dollar (USD) and the Mexican Peso (MXN) is a critical indicator of the economic relationship between the United States and Mexico. Over the past few months, this rate has experienced fluctuations influenced by various economic and political factors. This report provides an analysis of the recent trends in the USD/MXN exchange rate, examines the underlying causes, and offers insights into future projections.

Recent Trends in USD/MXN Exchange Rate

In the first quarter of 2025, the USD/MXN exchange rate exhibited notable volatility. On January 16, 2025, the exchange rate peaked at 20.838 MXN per USD, marking the highest point for the year. Conversely, the lowest rate was recorded on March 18, 2025, at 19.910 MXN per USD. The average exchange rate during this period was approximately 20.448 MXN per USD.

Factors Influencing the Exchange Rate

Several factors have contributed to the fluctuations in the USD/MXN exchange rate:

1. Economic Growth Forecasts: In April 2025, the Mexican government revised its economic growth forecast for the year to a range of 1.5% to 2.3%, down from the previous estimate of 2.0% to 3.0%. This downward revision reflects concerns over weaker residential investment and persistent supply shocks.

2. Trade Relations and Tariffs: The escalation of tariffs by the United States has introduced uncertainty into trade relations. Despite these challenges, the Mexican peso has remained relatively stable, supported by successful negotiations aimed at moderating the impact of U.S. tariffs. However, any significant deterioration in trade relations could exert additional pressure on the peso.

3. Inflation and Monetary Policy: Mexico's annual inflation rate is projected to end 2025 at 3.5%, aligning with the central bank's target range. This controlled inflation environment provides the central bank with flexibility in its monetary policy decisions, which can influence the exchange rate.

4. Political Climate: The upcoming presidential elections in Mexico have introduced a degree of political uncertainty. Historically, election periods can lead to currency volatility as markets react to potential policy changes.

Future Projections

Looking ahead, various forecasts provide insights into the potential trajectory of the USD/MXN exchange rate:

• Short-Term Forecasts: For May 2025, the exchange rate is projected to average around 20.1553 MXN per USD, with a range between 20.0545 and 20.2561.

• Medium-Term Forecasts: By the end of 2025, the exchange rate is expected to average approximately 20.2377 MXN per USD, with projections ranging from 20.1975 to 20.2779.

• Long-Term Forecasts: Looking further ahead, the exchange rate is anticipated to gradually increase, reaching an average of 20.3985 MXN per USD by the end of 2026.

Conclusion

The USD/MXN exchange rate is influenced by a complex interplay of economic indicators, trade policies, and political developments. While recent trends have shown relative stability, ongoing factors such as trade negotiations, economic growth projections, and political events will continue to play pivotal roles in shaping the exchange rate's future trajectory. Stakeholders should remain vigilant and consider these variables when making financial decisions involving the USD/MXN currency pair.