As 2025 draws to a close, it’s time to look back at what has been one of the most surprising years for the Mexican Peso in recent memory. It was also a year of big wins for MexEdge clients. More on that later.
The Real Story of 2025: Just How Wrong the “Experts” Turned Out to Be
If you had asked any major bank or financial institution at the start of the year where the Peso would be trading by December, not a single one would have predicted what actually happened.
The numbers tell the story: The Peso started 2025 at 20.84 to the dollar and finished the year at approximately 17.89. That is a strengthening of roughly 14% against the Dollar. For anyone buying or building property in Mexico, that swing represents tens of thousands of dollars.
But to understand how we got here, we need to briefly look back at the wild ride that was 2024.
Setting the Stage: The 2024 Rollercoaster
In April 2024, the Peso reached 16.38 to the Dollar, its strongest level in nearly a decade. The “Super Peso” was riding high on Mexico’s elevated interest rates, strong remittance flows, and optimism around nearshoring investment. For Dollar holders looking to buy property in Mexico, this was actually painful. Every Dollar purchased far fewer pesos compared to the 20 to 21 range that had been common in previous years.
Then everything changed.
Mexico’s June 2024 election delivered a landslide victory for Claudia Sheinbaum, but the real shock was Morena’s supermajority in Congress. Markets reacted swiftly and negatively, fearing constitutional reforms (particularly changes to the judicial system) that could undermine investor confidence. The Peso began its slide.
By November, Donald Trump’s victory in the U.S. presidential election added fuel to the fire. His campaign promises of tariffs on Mexican imports and aggressive immigration policies created additional uncertainty. The Peso weakened further.
By January 1, 2025, the Peso had fallen to 20.84. This was a stunning reversal from its April highs. The 2024 story was one of unexpected strength followed by dramatic weakness.
What the “Experts” Predicted for 2025
With the Peso at multi-year lows entering 2025, the consensus among major financial institutions was clear: expect more weakness ahead.
By June 2025, when the Peso had already begun its recovery and was trading at around 19.19, the major banks still weren’t buying it. Here’s what they predicted:
| Bank | Q3 2025 | Q4 2025 | Q1 2026 |
| Bank of America | 19.75 | 20.00 | 20.25 |
| Morgan Stanley | 20.50 | 20.55 | 20.60 |
| Scotiabank | 20.00 | 20.80 | 20.00 |
| J.P. Morgan | 19.50 | 19.50 | 19.40 |
| Average | 19.94 | 20.21 | 20.19 |
Every single major bank predicted the Peso would weaken. The average forecast for Q4 2025 was 20.21 Pesos to the Dollar.
The actual rate as of late December 2025? Approximately 17.89.
The “experts” weren’t just wrong. They were wrong by almost 13%. And they were wrong in the opposite direction of what actually happened.
What Actually Happened: The Dollar Weakens
Here’s the key insight about 2025: The Peso’s comeback was less about Mexico and more about the United States.
While 2024’s Peso weakness was driven largely by Mexican political events, the 2025 reversal was primarily a story of Dollar weakness. Several factors converged to undermine the greenback:
Federal Reserve Policy Shifts: Throughout 2025, expectations grew that the Fed would continue cutting interest rates. As U.S. yields declined, the Dollar lost some of its appeal to global investors seeking returns.
The Dollar Index Declined: The DXY, which measures the Dollar against a basket of major currencies, trended downward through much of 2025. This wasn’t just a Peso story. The Dollar was weakening broadly.
Capital Flows Shifted: With U.S. real yields softening, global investors began looking elsewhere for returns. Mexico, with its still-elevated interest rates, became an attractive destination.
Mexico’s Yield Advantage: Even as Banxico cut rates throughout 2025, Mexico’s benchmark rate remained at 7.00% by year end. That is still significantly higher than U.S. rates. This interest rate differential made holding Pesos attractive for carry trade investors.
Supporting Factors
While Dollar weakness was the primary driver, several Mexico-specific factors helped support the Peso’s strength:
Pragmatic Leadership: President Sheinbaum struck a more pragmatic tone than many investors had feared. Her approach to U.S. relations, including her handling of trade discussions, helped ease some of the political risk premium that had been priced into the Peso.
Strong Labor Markets: Mexico’s unemployment rate remained low throughout 2025, with rates generally below 3% for much of the year, supporting domestic consumption and economic stability.
Mexican Stock Market Performance: Despite economic headwinds, the Mexican stock market showed surprising strength in 2025, a reminder that markets don’t always follow the on-the-ground economic narrative.
The Real-World Impact for Property Buyers
Let’s put these numbers into perspective for someone buying property in Mexico.
Consider a $400,000 USD property purchase:
- At 20.84 (January 2025): You would have needed approximately 8,336,000 Peso
- At 17.89 (December 2025): That same property requires approximately 7,156,000 Peso
That’s a difference of 1,180,000 Peso, or roughly $66,000 USD at current rates.
The Lesson: Nobody Knows (But MexEdge Clients Won Anyway)
If there’s one takeaway from 2025, it’s this: Nobody can reliably predict where the Peso is going.
The major banks, with their armies of economists, sophisticated models, and access to proprietary data, were confidently wrong. They predicted weakness and got strength. They were off by almost 13%.
But here’s the thing: In 2024, the surprise went the other direction. The Peso was strong, and then it suddenly wasn’t. Anyone who had been betting on continued strength got caught.
Predictions are consistently wrong in both directions. The Peso surprises to the upside. The Peso surprises to the downside. The only consistent pattern is that the “experts” keep getting it wrong.
How MexEdge Clients Won Big
This is precisely why hedging exists. And it’s why 2025 was such a big win for MexEdge clients.
Throughout the year, while banks and analysts predicted the Peso would weaken, our clients chose not to gamble. They locked in their rates and secured certainty for their property purchases.
That decision paid off. Every single one of them.
Instead of watching headlines and hoping for favorable timing, they knew their exact costs from day one. No stress. No surprises. Just the peace of mind that comes from knowing what your property will cost, regardless of what the Peso does next.
But here’s the key insight: our clients didn’t win because they predicted the market correctly. They won because they didn’t have to predict at all.
Hedging isn’t about predicting where the Peso is going. It’s about eliminating the need to predict at all. When you lock in your exchange rate with MexEdge, you’re not making a bet on the currency. You’re opting out of the casino entirely. You’re saying, “I don’t know where the Peso is going, and I don’t need to know. I just need to know what my property will cost.”
That peace of mind has value. Value that the banks’ forecasts simply cannot provide.
Looking Ahead to 2026
Uncertainty hasn’t gone away. The USMCA trade agreement faces its six-year review in 2026. Fed Chair Jerome Powell steps down in May, potentially bringing shifts in U.S. monetary policy. Trade tensions with the U.S. remain a wildcard. And as we’ve seen, the Peso can move dramatically in either direction.
The banks are already publishing their 2026 forecasts. Based on their track record, we’d suggest taking those with a very large grain of salt.
For a deeper dive into what 2026 may hold and why it may be the most important year to hedge, check out our companion article: Why 2026 May Be the Most Important Year to Hedge.
Ready to eliminate currency risk from your Mexico property purchase?
Book a free Currency Risk Evaluation Call to discuss your specific situation and learn how MexEdge can help you lock in your exchange rate with confidence.
MexEdge helps Americans and Canadians protect their property purchases in Mexico from currency fluctuations. We provide the same forward contract tools that large corporations use, tailored specifically for individual buyers and developers.
