Mexican Peso Hits February Highs

The Mexican peso strengthened by 0.13% to 17 per USD, driven entirely by the reopening of the Strait of Hormuz. This breakthrough has pushed the currency back to levels not seen in 11 weeks, completely erasing the volatility caused by the conflict. This recovery is supported by a weaker US Dollar (DXY -0.29%) and a massive 12% drop in oil prices. With the naval blockade resolved, global optimism has returned, allowing the peso to reach its strongest point since early February as investors expect a solid finish to the week across global markets.

The Mexican peso strengthened to around 17.27 per U.S. dollar, its highest level since late February. The appreciation was driven by broad dollar weakness and increased risk appetite, supported by optimism over diplomatic progress between the US and Iran. Despite global uncertainty, Mexico continues to attract interest, underpinned by relatively high interest rates and robust manufacturing data. Monetary policy remains a key driver, with the benchmark rate at 6.75%, comfortably exceeding the 4.59% inflation rate. Meanwhile, February exports rose 15.8% to $56.85 billion, fueled by a surge in mining and manufactured goods. This resilience is further reinforced by auto exports climbing 4.2% year-over-year in March (310,205 units)

The Mexican peso strengthened 0.3% on Friday, trading around 17.31 as markets focused on geopolitical developments, including US–Iran negotiations. Uncertainty in the Middle East, particularly risks around the Strait of Hormuz, continues to support a geopolitical risk premium. The US dollar remains under pressure as US inflation stays broadly in line with expectations and the Federal Reserve maintains a cautious, data-dependent stance, limiting Treasury yield upside. At the same time, resilient but uneven US growth keeps markets balanced between inflation and slowdown risks. Risk appetite supports emerging market currencies, with the peso benefiting from strong carry appeal and a wide interest rate differential versus the US. USD/MXN is down 14.79% this year, reflecting dollar weakness and sustained inflows into Mexican assets.