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Citi Mexico Survey expects Banxico hold, USD/MXN ending 2026 at 17.90

Citi Mexico released the Expectations Survey on Monday, in which the central bank polled 35 economists to gather their forecasts for monetary policy, the USD/MXN exchange Rate, inflation expectations, and economic growth.

Citi’s survey shows that the majority of the economists polled expect monetary policy to remain steady at 6.50%. Seven of those 35 expect the next movement to be a rate hike, and six expect a cut further ahead. The rest expect policy to remain steady.

The USD/MXN exchange rate is expected to end at 17.90 in 2026, unchanged. For 2027, the consensus suggests a depreciation of the Mexican Peso (MXN), with the exchange rate seen at 18.50, with expectations of trading within a range of 17.40-19.95.

Regarding inflation expectations for July, the Consumer Price Index (CPI) is projected at 3.13% YoY, down from 3.37% in the previous survey, while core CPI is seen at 3.94% YoY, lower than the previous survey's 4.03%.

For the medium term, CPI is projected to end at 4.02% YoY, down from 4.09%, while Core CPI, the component, is expected to drop from 4.10% to 4%.

The Mexican economy is projected to grow 1.2% in 2026, up from 1.1% in the last survey, while for 2027, the projections show the Gross Domestic Product (GDP) ending at 1.8%, unchanged from the previous survey.

Mexican Peso FAQs

The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.

The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.

Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.

As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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