Why Does the Mexican Peso Swing So Much Against the US Dollar?
Direct answer
Why USD/MXN moves so much
The Mexican peso swings so much because it is a liquid, freely floating emerging-market currency that global investors use for carry trades and as a quick hedge when markets fall. When risk appetite drops, they sell it first; when calm returns and Mexican interest rates look attractive, they buy it back. On Federal Reserve data, USD/MXN rose from 9.92 to 13.94 in 2008 (+40%), from 18.57 to 25.13 in five weeks in 2020 (+35%), and from 16.33 to 20.86 in 2024, then the peso strengthened back to about 17.9 by late 2025. Its yearly volatility has usually been about one and a half to two times the euro's.
- Liquid, free-floating emerging-market currency: sold first in risk-off moves
- Carry trade: higher Mexican rates attract inflows, which reverse fast
- 2008: 9.92 → 13.94 (+40%)
- 2020: 18.57 → 25.13 in 5 weeks (+35%)
- 2024: 16.33 → 20.86
- late 2025: about 17.9
- 2026 so far: 16.86–18.79
- Volatility 2016–2026: 9–20% a year vs 5–10% for EUR/USD
USD/MXN can sit quietly for months and then move 10% in a week. That pattern is not random: it follows a few recurring forces that hit the peso harder than most currencies.
What people on X are asking
In June 2025 a commentator asked forex experts why the US dollar was getting "savaged" by the Mexican peso. In March 2025 another post asked why the peso was getting stronger as it moved toward 20.2 per dollar, and in January 2026 a reply asked why the Mexican peso is strong compared with the dollar. The peso goes through phases of strength and weakness, and both are bigger than for major currencies.
The fact-checked answer
How to read the number. USD/MXN is quoted in pesos per dollar. A higher number means a weaker peso. Our data are the Federal Reserve's daily noon buying rates from FRED, which go back to 1993.
UXS chart
Pesos per US dollar since 2006 (higher = weaker peso)
USD/MXN (pesos per dollar): latest
18.62
November 6, 2026
Highest in chart period
25.13
March 24, 2020
Lowest in chart period
9.92
August 5, 2008
Change over 1 year
+0.0%
vs November 6, 2025
Year by year: USD/MXN (pesos per dollar)
Computed by UXS from the same data as the chart. Tap a column header to sort. * = year to date (latest data November 6, 2026).
| 2026* | 18.62 | +3.4% | 18.79 | 16.86 |
| 2025 | 18.01 | -13.7% | 20.94 | 17.91 |
| 2024 | 20.86 | +23.4% | 20.86 | 16.32 |
| 2023 | 16.90 | -13.3% | 19.42 | 16.66 |
| 2022 | 19.50 | -5.0% | 21.40 | 19.15 |
| 2021 | 20.51 | +3.1% | 21.85 | 19.66 |
Big peso moves on Federal Reserve data
UXS calculation from FRED DEXMXUS. In June 2024 the rate went from 16.99 on May 31 to 18.74 on June 12, the days around Mexico's general election. Tap a column header to sort.
| 1994–95 peso crisis | 3.47 (Dec 19, 1994) | 7.60 (Mar 9, 1995) | +119% |
| 2008 financial crisis | 9.92 (Aug 5, 2008) | 13.94 (Nov 21, 2008) | +40% |
| 2016 US election | 18.64 (Nov 7, 2016) | 20.84 (Nov 14, 2016) | +12% in a week |
| 2020 pandemic shock | 18.57 (Feb 14, 2020) | 25.13 (Mar 24, 2020) | +35% in 5 weeks |
| 2020 recovery | 25.13 (Mar 24, 2020) | 19.89 (Dec 31, 2020) | −21% |
| 2024 sell-off | 16.33 (Apr 8, 2024) | 20.86 (Dec 31, 2024) | +28% |
| 2025 rebound | 20.94 (Apr 9, 2025) | 17.91 (Dec 26, 2025) | −14% |
| 2026 to Nov 6 | 16.86 (Sep 4) | 18.79 (Oct 30) | range of about 11% |
Volatility compared. Measured as the annualised standard deviation of daily changes, the peso was 16.6% volatile in 2016 and 19.5% in 2020, against 8.9% and 7.4% for the euro. In 2024 it was 13.3% vs 5.7%; in 2026 so far, 9.1% vs 5.6%. Only in 2022, when the euro itself was under pressure, were they similar (10.1% vs 9.9%).
Why the peso moves so much.
- It is the emerging-market currency investors can sell fastest. The peso is freely floating, trades around the clock and is among the most traded emerging-market currencies (the BIS triennial survey lists turnover by currency). When investors want protection against an emerging-market or global sell-off, selling pesos is often the quickest route, even if the problem is elsewhere. That is why it fell in 2008 and 2020 alongside stocks.
- Carry trades. Mexican short-term interest rates have for years been well above US rates (Banco de México publishes its target rate). Investors borrow in low-rate currencies and hold pesos to earn the gap. That pushes the peso up slowly in calm markets, and when volatility jumps, many close the trade at once and it falls fast. See what a carry trade is.
- The US connection. Most of Mexico's exports go to the United States, so news about US trade policy, tariffs and the US economy moves the peso directly; the week after the 2016 US election is an example.
- Domestic politics and policy. Elections, judicial and energy reforms and fiscal news change how investors price Mexican risk, as in June 2024.
- Oil and remittances. Oil revenue and money sent home by workers in the US are also dollar inflows, though their influence has changed over time.
Strong and weak phases. When the peso was strong in 2023 and again in 2025, people called it the "super peso". Those phases came with high Mexican rates and calm markets; they ended or paused when volatility rose. A strong peso is not a sign it will keep rising, and a sharp sell-off has often been followed by a partial recovery, as after March 2020.
What it means for trading. Spreads on USD/MXN are wider than on EUR/USD, swap charges or credits can be large because of the rate gap, and moves of 2–3% in a day happen in stress. Size positions for that; see how leverage magnifies currency moves, what moves the dollar index and why I was charged a swap fee overnight.
The peso has no weight in the DXY but does in the Fed's broad index; see DXY vs broad dollar.
Even liquid emerging-market pairs cost more than majors; see why exotic pairs have wider spreads.
Decision helper
| If you see… | It often means |
|---|---|
| Global stocks falling, VIX jumping | Peso weakens quickly |
| Calm markets, wide rate gap | Slow peso strength (carry) |
| US tariff or trade headlines | Sharp peso moves either way |
| Mexican election or reform news | Local risk repricing |
Common mistakes
- Reading USD/MXN upside down (higher = weaker peso).
- Treating the "super peso" as a one-way bet.
- Using EUR/USD position sizes on MXN.
- Ignoring large swap amounts on carry positions.
FAQ
Why is the Mexican peso so volatile?
It is a liquid, free-floating emerging-market currency used for carry trades and hedging.
Why does the peso fall when stocks fall?
Investors cut emerging-market risk and close carry trades, often by selling pesos first.
Why was the peso strong in 2025?
On Fed data it rose from 20.94 per dollar in April to 17.91 in December as markets calmed.
What was the peso's biggest fall?
In the 1994–95 crisis, USD/MXN more than doubled, from 3.47 to 7.60.
Is USD/MXN good for beginners?
It moves more and costs more to trade than the major pairs; see which pair suits beginners.
Do interest rates affect the peso?
Yes; the gap between Mexican and US rates drives carry flows in and out.
Sources
- FRED: Mexican pesos to U.S. dollar (DEXMXUS)
- Federal Reserve: H.10 foreign exchange rates
- Banco de México
- BIS: Triennial Survey of FX turnover 2025
Facts checked November 10, 2026. X posts are cited as evidence of the question, not of the answer.