Mexican Peso Falls Against the Dollar After Weak GDP Data

The Mexican peso weakened against the U.S. dollar on Friday after data confirmed that Mexico’s economy contracted in the final quarter of 2024, in line with initial estimates.

The exchange rate closed at 20.4131 pesos per dollar, compared to 20.3129 pesos in the previous session, according to official data from the Bank of Mexico (Banxico). This represents a 10.02-cent drop for the peso, equivalent to a 0.49% decline.

USD/MXN

During the session, the dollar traded between a high of 20.4282 pesos and a low of 20.2918 pesos. Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, rose 0.24% to 106.62 points.

Mexico’s National Institute of Statistics and Geography (INEGI) reported that GDP shrank 0.6% in Q4 2024, based on seasonally adjusted figures. For the full year, the economy grew just 1.2%, impacted by a slowdown in the agricultural sector.

Mexican Economy Forecast

The economic outlook for 2025 remains weak, with downside risks stemming from Mexico’s trade relationship with the United States and the need to maintain a significantly lower fiscal balance than in 2024.

This week, Banxico’s quarterly report slashed its 2025 GDP growth forecast by 50%, from 1.2% to just 0.6%. The peso ended the week with a 10.91-cent (0.54%) drop, compared to last Friday’s closing rate of 20.3040 pesos per dollar.

Market sentiment was also dampened by data showing that U.S. business activity stagnated in February, while consumer confidence fell more than expected, reaching a 15-month low.

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.