Bearish pressures have returned for the Mexican peso, with the currency experiencing its first unfavorable movements of 2025, reversing the previous recovery and showing a 0.4% depreciation against the US dollar (USD/MXN).
This trend, despite the marginal weakness of the dollar during the session, comes at a crucial time for the Mexican economy, characterized by unfavorable macroeconomic data, including a rise in unemployment and a decline in consumer confidence.
It is important to highlight that various external and internal factors are exerting pressure on the currency.
On the international front, the Federal Reserve’s monetary policy and the strength of the US economy play a crucial role. The expectation of a restrictive stance by the Fed could strengthen the dollar, generating selling pressure on the peso.
Strong US labor market data fuels speculation that the Fed might keep interest rates unchanged at its next meeting, adding volatility to the exchange market. The potential inauguration of Trump and his trade policies also inject uncertainty, negatively affecting the peso.
Domestically, business confidence in Mexico dropped to 51.2 points in December, the lowest level since January 2023, with significant setbacks in the construction and retail sectors. This weakness, coupled with a limited economic recovery, intensifies the pressure on the peso. While the services and manufacturing sectors show slightly positive indicators, they fail to fully offset the losses.
The labor market presents a challenging outlook. The unemployment rate rose to 2.6%, while underemployment stands at a concerning 8.9%. This high underemployment level, along with labor informality affecting more than 50% of the workforce, reveals structural weaknesses in the Mexican economy, despite low unemployment rates. Notably, female unemployment stands at 2.8%, slightly surpassing the male rate of 2.6%.
Looking ahead, it is crucial to monitor key data such as consumer confidence, inflation, and industrial production. Weak economic data could further erode investor confidence and weaken the peso.
