MEXICO CITY, July 22, 2026, 05:06 CST — Foreign exchange markets have started trading, while Mexican cash equity markets remain closed.
- Early Wednesday, USD/MXN was quoted at 17.4211, moving between 17.3914 and 17.4375.
- Mexico continued to hold a policy-rate lead of 275–300 basis points.
- According to a Citigroup NYSE:C survey, the projected year-end USD/MXN exchange rate stands at 17.90.
The Mexican peso traded close to 17.42 per dollar early Wednesday. A 17.90 forecast for the end of the year challenges its appeal as a carry trade.
Banxico’s policy rate stands at 6.50%, which is 275–300 basis points higher than the Federal Reserve’s range. This difference continues to support the peso carry trade.
Between July 22 and December 31, the spread generates a simple carry of approximately 1.22% to 1.33%. The figure does not account for expenses, compounding, or adjustments in policy.
If USD/MXN rises from 17.4211 to 17.90, the pair would gain 2.75%. For dollar-based investors, this would bring a long peso spot loss near 2.68%, more than double what is left of the carry cushion.
| Comparison | Latest or forecast | Approximate investor effect |
|---|---|---|
| USD/MXN spot | 17.4211 | Opening figure |
| Banxico–Fed rate spread | 275–300 basis points | Primary source of carry |
| Simple carry through Dec. 31 | 1.22%–1.33% | Excludes costs and policy shifts |
| Citigroup year-end survey | 17.90 | Long peso position sees 2.68% spot decline |
| July 1 poll, 12-month median | 17.78 | 2.02% spot drop from present value |
The outcome varies based on the time frame. The one-year median of 17.78 points to an estimated spot depreciation of about 2%. Such a shift could be offset by a year’s nominal rate differential.
The peso gained 0.18% on Tuesday, finishing the local trading session close to 17.39, marking a second consecutive advance. In early trading Wednesday, its range narrowed to just 4.6 centavos.
Trade policy is currently the most probable source of momentum. Negotiators from the U.S. and Mexico began a third round of discussions on Tuesday.
The discussions are scheduled to last three days, focusing on automobiles, steel, aluminum, agriculture, and labor matters.
North American trade worth roughly $1.6 trillion each year is underpinned by USMCA. Yearly evaluations will proceed until either renewal or expiration in 2036.
“The local backdrop interacts directly with geopolitical and international trade fronts,” said Felipe Mendoza, an analyst at EBC Financial Group. He pointed to the initial yearly USMCA review. Grupo Milenio
Mexico’s weakened growth prospects contribute to rising pressures. A survey of 32 economists lowered the 2026 growth forecast to 1.1% from 1.5%. The median estimate for 2027 slipped to 1.8%, down from 1.9%.
Still, Banxico kept its rate steady at 6.50% in June, with unanimous backing. The board stated that maintaining the current rate was still the right move.
The U.S. outlook might remain unchanged as well. In a July poll, all 104 economists predicted the Fed would maintain rates at its July 28–29 meeting. Seventy-eight anticipated no adjustment for the rest of the year.
Risks: The peso could swiftly lose ground if the USMCA collapses, the U.S. imposes new tariffs, or the Fed raises rates. Expectations of further Banxico rate cuts would shrink the carry trade benefit.
The upcoming conclusion of trade negotiations on Thursday is the next immediate milestone. Up to that point, the peso’s carry retains value, though not without limitations.
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