USD/MXN: US dollar / Mexican peso

USD/MXN is the price of one US dollar in Mexican pesos. If the pair is at 18.0000, one dollar costs 18 pesos. A rising USD/MXN means the peso is weakening. The peso is one of the most traded emerging-market currencies, and its fortunes are closely bound to the United States, which buys most of Mexico's exports and is home to the workers who send billions of dollars back to families in Mexico every year.

This profile covers who trades the pair, the two central banks behind it, what moves it, how it behaves by session, what it costs, a pip value example, correlations, notable episodes and how to approach it as a beginner.

What USD/MXN is and who trades it

USD/MXN is an exotic pair: a major currency against the currency of an emerging economy. Our guide to currency pairs explains the categories. Even so, the peso is unusually liquid for an emerging-market currency. It trades around the clock in offshore centres, and global investors often use it as a liquid way to express views on emerging markets or on the US economy.

Participants include Mexican and US companies settling cross-border trade, manufacturers with plants on both sides of the border, foreign investors in Mexican government bonds, banks handling remittance flows, macro funds running carry trades and retail CFD traders.

Under ESMA's retail rules, only combinations of USD, EUR, JPY, GBP, CAD and CHF are majors. USD/MXN is therefore capped at 20:1 for retail clients of EU-regulated providers, and some providers set lower limits on exotic pairs. See ESMA leverage limits.

The two economies and central banks behind it

The United States and the Federal Reserve

The Federal Reserve sets US rates through eight scheduled FOMC meetings a year. For USD/MXN the Fed matters twice over: through the US side of the rate gap, and through the effect of US policy on global risk appetite and flows into emerging markets.

Mexico and Banxico

The Banco de México, known as Banxico, is independent and targets annual consumer price inflation of 3%, with a variability range of one percentage point either side. Its Governing Board holds eight scheduled monetary policy decisions a year, with announcements usually released at 13:00 Mexico City time, which is 19:00 or 20:00 UK time depending on the season. Banxico has historically kept rates well above US levels, partly to anchor inflation expectations and partly because emerging-market investors demand a premium.

Mexico's economy is deeply integrated with the US. Manufacturing, especially cars and electronics, is organised around supply chains that cross the border, governed since July 2020 by the United States-Mexico-Canada Agreement (USMCA), which replaced NAFTA. Mexico became the largest US trading partner in 2023. Remittances from Mexican workers in the US are a large and steady source of dollar inflows, and so is foreign direct investment, including the "nearshoring" of production from Asia to Mexico that many companies discussed after the pandemic.

The result is a wide interest rate differential in Mexico's favour for most of recent history. Our guide to central banks and interest rates explains why the expected path of rates matters most.

What typically moves USD/MXN

The carry trade

Mexico's high rates, combined with the peso's liquidity, have made it one of the most popular carry trade currencies. Investors borrow in a low-yielding currency such as the yen or the dollar and hold pesos to earn the difference. In calm markets this flow tends to support the peso. When volatility jumps, carry positions are closed together, and USD/MXN can rise very sharply in a few sessions. The pair's pattern of slow declines and fast spikes is largely a carry pattern.

US trade policy and the US economy

Because the US buys the large majority of Mexico's exports, anything that threatens access to the US market hits the peso: tariff announcements, renegotiation of trade agreements, border disputes. US growth matters too, through demand for Mexican goods and through the jobs that fund remittances.

Global risk sentiment

Like other emerging-market currencies, the peso has tended to weaken when global investors become nervous, for instance when equities fall sharply or US yields jump, and to strengthen when risk appetite is strong.

Mexican politics and policy

Elections, constitutional reforms, energy policy and the finances of state oil company Pemex have all affected how foreign investors view Mexico. Big political surprises have produced some of the peso's sharpest moves.

Oil

Mexico is an oil producer, and oil prices used to be a more important driver of the peso. The link has weakened as manufacturing exports have grown and as oil production has declined, but sharp oil moves can still feed into sentiment.

Scheduled data

US payrolls, CPI and FOMC decisions are usually the biggest scheduled events. Mexican CPI, GDP and Banxico decisions matter too. See how economic data moves forex.

Its character: liquidity, sessions and volatility

Mexico City abolished daylight saving time in 2022 and stays on UTC minus six all year, so it is six hours behind the UK in winter and seven in the UK summer. Times below are UK time.

• Asian session (roughly 23:00 to 07:00 UK time): the thinnest period, with wider spreads and occasional erratic moves on little volume.
• London morning (about 07:00 to 12:00 UK time): active, as European banks trade the peso as part of their emerging-market books.
• New York and Mexico City (about 13:00 to 21:00 UK time): usually the busiest window, with US data at 13:30 UK time for most of the year, Mexican markets open and Banxico decisions in the evening UK time.
• Late New York and rollover (around 22:00 UK time): thin liquidity and the widest spreads of the day.

The market hours tool shows the sessions in your own time zone.

USD/MXN has generally been more volatile than the major pairs, with long calm stretches broken by violent episodes. Because its pip is the fourth decimal on a rate in the high teens or twenties, a move of 20 centavos is 2,000 pips. Think in money, not pips. Weekend political or trade news can also produce gaps at the weekly open; see gap risk and weekend risk.

Costs of trading USD/MXN

Spreads on USD/MXN are typically much wider than on the majors in both pips and percentage terms, though tighter than on many other exotics. They widen sharply in the Asian session, around rollover and during stress. Compare the cost in money for your planned position size, not in pips; our guide to exotic pair trading costs shows how, and why spreads widen explains the timing.

The swap is central to this pair. With Mexican rates usually well above US rates, short USD/MXN positions (long peso) have typically earned a credit or paid little, and long USD/MXN positions have paid a noticeable daily charge, tripled on one night of the week to cover the weekend. Provider markups reduce credits and increase charges. The swap calculator shows what a holding period costs; see also swap and overnight financing. Keep in mind that a month of swap credits can be wiped out by a single day's adverse move in a carry unwind.

Pip value: a worked example

On USD/MXN a pip is 0.0001 and profit and loss accrue in pesos, the quote currency. These numbers are illustrative.

• One standard lot is 100,000 US dollars. A pip is 100,000 times 0.0001 = 10 MXN.
• A mini lot is 1 MXN per pip; a micro lot 0.10 MXN per pip.

To convert to your account currency, divide by the relevant rate. At an illustrative USD/MXN of 18.0000, 10 pesos is about 0.56 USD. At an illustrative EUR/MXN of 20.0000, it is 0.50 EUR. At an illustrative GBP/MXN of 23.5000, about 0.43 GBP.

Now a trade. You sell 0.2 lots (20,000 dollars) at 18.0000 with a stop at 18.3000, a stop of 0.3000 or 3,000 pips. Each pip is worth 2 pesos, so the stop is 6,000 pesos, about 333 USD at 18.0000, or about 300 EUR at an EUR/MXN of 20.0000, before spread and swap. Margin at 20:1 on 20,000 dollars is 1,000 USD. That margin is collateral, not the maximum loss: in a carry unwind, USD/MXN can gap through a stop. The pip value calculator and position size calculator do the conversions for you.

Correlations with other pairs

• USD/ZAR and other emerging-market pairs have often moved in the same direction as USD/MXN, because global investors tend to buy and sell emerging-market currencies as a group. See the USD/ZAR profile.
• USD/CAD shares exposure to North American trade and US trade policy, and the two pairs have at times moved together, although the Canadian dollar is far less volatile.
• Yen crosses such as AUD/JPY have at times moved with the peso's carry trade: when yen-funded carry positions unwind, the peso and other high-yielders can fall together.
• US equity indices have often shown an inverse relationship with USD/MXN, since a stronger stock market has tended to coincide with a firmer peso.

Correlations change and can break abruptly on Mexican political or US trade news; see currency correlation.

Notable history

The Tequila crisis (December 1994)

In December 1994, with foreign reserves running low, Mexico widened the peso's trading band and then, days later, let the currency float. The peso lost around half its value against the dollar over the following months, triggering a deep recession and an international rescue package led by the US and the IMF. The peso has floated freely since.

The 2016 US election

During the 2016 US presidential campaign, the peso became a popular way to trade the risk of a Trump victory, given his pledges on trade and immigration. When the result came in on the night of 8 to 9 November 2016, USD/MXN jumped sharply and the peso hit record lows against the dollar.

Election, reform and the carry unwind (2024)

Mexico's general election on 2 June 2024 produced a larger-than-expected victory for the governing party, raising investor concern about constitutional changes, including a judicial reform. The peso, which had been one of the most crowded carry trades in the world, weakened sharply. In late July and early August 2024, as the Bank of Japan raised rates and a weak US jobs report hit risk appetite, yen-funded carry trades were unwound globally, and the peso fell further. By late August it had lost more than 10% against the dollar since the election. The episode is a textbook example of a carry currency's asymmetry: months of gradual gains given back in weeks.

Trading USD/MXN as a beginner

• Size in money, not pips. A 3,000-pip stop may be an ordinary distance on this pair. Work out the money at risk first; see position sizing.
• Do not trade the swap. Holding the peso to collect a daily credit exposes you to the sharp sell-offs that carry currencies are known for.
• Respect the spread. Very short-term trading is much more expensive here than on the majors, especially outside the New York session.
• Plan for gaps and headline risk. Trade and political announcements can land at any time, including weekends. A stop is not a guaranteed exit price.
• Watch stacked exposure. USD/MXN, USD/ZAR and a long AUD/JPY can all be the same risk-appetite trade.
• Keep the odds in view. Most retail CFD accounts lose money and leverage magnifies losses. Practise on a demo account through a full week of New York sessions first.

Frequently asked questions

Why is the peso called a carry currency?

Because Mexican interest rates have usually been well above those in the US, Japan or Europe, and the peso is liquid enough for large investors to trade easily. Investors borrow cheaply elsewhere and hold pesos to earn the difference, which supports the peso in calm markets but can cause sharp falls when those positions are closed.

How much is a pip worth on USD/MXN?

On a standard lot of 100,000 dollars, a pip is 10 pesos. At an illustrative rate of 18 pesos per dollar, that is about 0.56 USD. Stops on this pair are therefore measured in hundreds or thousands of pips.

When is USD/MXN most active?

Usually during the New York and Mexico City session, roughly 13:00 to 21:00 UK time, when US data is released and Mexican markets are open. The Asian session is typically the thinnest.

What leverage can I use on USD/MXN in the EU?

Retail clients of EU-regulated providers are capped at 20:1, the cap for non-major currency pairs, meaning a margin of 5% of the position's value. Some providers set stricter limits.

Why does US trade policy move the peso so much?

The US is Mexico's dominant export market, and Mexican manufacturing is built around supply chains that cross the border. Any threat to that access, such as tariffs or a change to the USMCA, affects Mexico's growth prospects and investment inflows, and so the peso.