Carry trade lifts Mexican peso 5.6% against dollar from January to August

The Mexican peso ended August among the year’s strongest-performing currencies, gaining 5.61% against the dollar in the first eight months of 2026. It closed the month at 16.9971 pesos per dollar, compared with 18.0080 at the end of 2025.

The advance accelerated in August, when the exchange rate fell 1.87% from its previous close of 17.3207 pesos per dollar. Grupo Financiero Base calculated a monthly gain of 1.97%, while the currency reached 16.8875 on Aug. 24, its strongest level of 2026 and its lowest since May 29, 2024.

The peso’s average August exchange rate stood at 17.0617, and volatility declined to 4.15%, its lowest level since December 2025 and, before that, since May 2014. The peso ranked fifth among major currencies for August gains and sixth for the year to date.

Banco Base said the currency’s strength “does not reflect the performance of the Mexican economy.” It attributed the move mainly to carry trade, which seeks to benefit from interest-rate differences, as well as global and domestic risk perceptions and expectations for foreign currencies. Banamex also said carry trade had supported the peso and described the currency as closing August near its strongest level in two years.

The peso gained 2.62% in the first three weeks of August as a weighted dollar index fell 1.99%. Base linked the dollar’s decline to weaker-than-expected U.S. inflation, employment and retail-sales data. The trend eased in the final week after Federal Reserve Chairman Kevin Warsh delivered a speech in Jackson Hole that markets viewed as restrictive.

Banamex does not expect changes in U.S. interest rates for the rest of 2026, although it acknowledged upside risks. Base said speculation had returned over a possible 25-basis-point increase before year-end. It also warned that September could bring volatility during the review of the Mexico-U.S.-Canada trade agreement.

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does not reflect the performance of the Mexican economy