The Mexican peso broke through the 17 pesos per dollar level on Wednesday, trading at 16.9544 in early morning operations. According to Banco Base, the currency has accumulated an appreciation of 5.22% or 94 centavos so far in 2026, reaching a low of 16.97 pesos during August not seen since 3 June 2024.
Monex reported that during the overnight session the exchange rate had fallen to 17.04 pesos, reflecting an appreciation of 0.17% for the Mexican currency and a gain of 2.78% compared to a month earlier. The financial group attributed the advance to a broad retreat of the dollar and the United States decision to postpone tariffs on Canada in the context of the T-MEC review.
Banco Base identified a resurgence of carry trade operations as one of the main drivers of peso appreciation. In this strategy, investors finance themselves in currencies with low rates to place resources in assets denominated in currencies with higher returns, such as the Mexican peso. Between 29 July and 11 August, net positions betting on peso appreciation in the Chicago futures markets increased by 15.37%, equivalent to 11,145 contracts, reaching 83,673 contracts of 500,000 pesos each.
The second factor behind the advance is the broad weakness of the US currency. Monex reported on Wednesday a 0.24% fall in the dollar index, while markets awaited Federal Reserve minutes. Banco Base explained that the recent slowdown in US inflation led investors to withdraw bets on a Federal Reserve rate increase during 2026, with the weighted dollar index accumulating a 0.46% fall during August.
However, Banco Base warned that the peso's current level may not hold towards the end of the year. The institution lowered its forecast for the exchange rate at the close of 2026 from 17.82 to 17.29 pesos per dollar, and for the end of 2027 from 18.31 to 17.84 pesos, both implying a depreciation compared to the 16.95 pesos observed on Wednesday.