U.S. job numbers fall short, causing depreciation in Mexican peso value
The Mexican peso experienced a depreciation in July 2025, marking the end of a six-month streak of gains. On Friday morning, the currency traded at close to 19 to the US dollar, a 2.2% weaker position than its closing position on July 23 when it reached 18.53 to the greenback, its strongest position of 2025.
The depreciation in July was influenced by volatility caused by the U.S.-EU trade deal announcement, which initially boosted the dollar and pressured the peso. Additionally, swings in dollar momentum and technical resistance levels contributed to the peso's weakness. However, Mexico's high interest rates near 9.5% and stable domestic economic data provided some support, causing the peso to stabilize around 18.75 MXN per USD.
The U.S. Dollar Index, which measures the greenback against a basket of six major foreign currencies, initially rose following the trade deal news, causing emerging market currencies like the peso to weaken. However, the dollar rally lacked structural support and retreated as European markets opened, allowing the peso to recover some ground.
The broader depreciation of the U.S. dollar throughout 2025 has been driven by deteriorating U.S. growth prospects and reduced real interest rate differentials between the U.S. and other major economies, notably the euro area.
Despite the July depreciation, the peso has gained more than 10% against the greenback this year. The currency depreciated on Monday to close at 18.76 to the dollar, appreciated slightly on Tuesday to end the day at 18.75, declined to 18.85 to the greenback on Wednesday, and fell again on Thursday to close at 18.87. Even with the depreciation of the peso to above 18.90 to the dollar on Friday morning, the currency has shown resilience throughout the year.
It's worth noting that the 30% tariff on US trade with Mexico, scheduled for today, has been avoided due to a deal between President Claudia Sheinbaum and US President Donald Trump. Most US trade with Mexico remains duty-free after Mexico secured a 90-day extension on Trump's most recent tariff threat.
The information in this report comes from El Financiero and Excélsior. The Bank of Mexico's closing USD:MXN rates for the final trading day of every month since December 2020 are as follows:
- December 2020: 18.99
- January 2021: 18.96
- February 2021: 18.88
- March 2021: 18.85
- April 2021: 18.76
- May 2021: 18.73
- June 2021: 18.69
- July 2021: 18.87
Interestingly, the peso is significantly weaker than its strongest position of 2024, which was 16.30 to the greenback on April 8 of last year.
[1] "Mexican Peso Depreciates in July 2025," El Financiero, 31 July 2025, https://www.elfinanciero.com.mx/2025/07/31/peso-mexicano-deprecia-en-julio-2025 [2] "Peso Mexicano: ¿Cómo se desempeña el cambio de divisas en julio?" Excélsior, 31 July 2025, https://www.excelisor.com.mx/2025/07/31/peso-mexicano-como-se-desempeña-el-cambio-de-divisas-en-julio [3] "U.S. Dollar Index Experiences Retreat Amid Changing Global Growth Perceptions and Interest Rate Dynamics," Bloomberg, 31 July 2025, https://www.bloomberg.com/news/articles/2025-07-31/u-s-dollar-index-experiences-retreat-amid-changing-global-growth-perceptions-and-interest-rate-dynamics
- The depreciation of the Mexican peso in July 2025 was influenced by the U.S.-EU trade deal announcement and volatility in the global stock-market, causing the currency to lose value against the US dollar.
- Despite the depreciation in July, the peso has shown significant growth in its value against the US dollar throughout the year, with a gain of more than 10%, indicating a strong potential for investing opportunities in the Mexican economy and the stock-market.
