Comprehensive guides to money, finances and banking services in Mexico—continually updated

Money, finances, and banking services in Mexico

Complete guides to money, currency and banking services in Mexico.

Our guides and articles give you a comprehensive overview of Mexico’s money system as well as the banks and banking services available that help to facilitate the commercial interactions you’ll need to engage with while you’re here.

The local knowledge shared here helps you to consider your needs and
formulate a plan to manage your money and any investments you have in Mexico, as well as arrange banking and financial services that provide essential support as you begin to realize your living and lifestyle plans.

Complete guide to money & banking services in Mexico

Our guides to Money & Banking Services in Mexico provides you with a definitive resource about managing your money and making use of banking services in Mexico.  The regularly-updated guides and articles include:

• The Mexican peso – learn about the country’s currency and its banknotes
• Bank cards – using debit, credit cards in Mexico
• Using ATMs in Mexico
• Money exchange – learn about different ways of exchanging foreign currency for Mexican pesos and vice versa
• Money transfers – how to transfer money to, from and within Mexico
• Money essentials – money and banking safety tips and local knowledge
• Opening a Mexican bank account – the requirements and mechanics of opening and running a bank account in Mexico
• Mexican banks and banking services – services and facilities offered by Mexican banks, as well as a profile of the principal banks and financial institutions
• Options for financing real estate in Mexico

Learn about managing your money in Mexico

Mexperience offers you a wealth of information about Mexico’s money, banking services, and banknotes.

• Learn more about managing your money in Mexico
• Articles about Mexico’s banknotes
• Latest articles about the Mexican peso
• Latest articles about Money and finance in Mexico

Exchanging your money for Mexican pesos

There are three main ways that most people exchange their home currency into Mexican pesos:

• Using a local ATM in Mexico to withdraw cash from an account based outside of Mexico; or
• Exchanging foreign currency cash for Mexican pesos; or
• Transferring money from a foreign bank account to a bank account in Mexico.

Also:

• Some local banks in Mexico might cash a paper check drawn on a bank in the United States of America; and
• see the important note below about the use of paper Traveler’s Checks.

Using ATMs to get Mexican pesos locally

As we described in a related article, holders of bank cards issued outside of Mexico can withdraw cash in Mexican pesos from local ATMs. That article describes the process and the typical charges involved.

• The number of pesos you withdraw is converted and charged to the account where the money is held in the local currency, e.g., US dollars, Canadian dollars, British pounds, Euros.
• This is a quick and efficient way to buy Mexican pesos using a debit card linked to a checking or savings account abroad.
• All ATMs in Mexico have an upper limit of pesos they will dispense in any one transaction, and the amounts vary by bank.
• Typically, an ATM will allow foreign card holder to withdraw between 5,000 and 10,000 pesos per transaction.  Also, check with your bank about any daily limits it may impose on cash withdrawals.

Exchanging your foreign currency cash for Mexican pesos

Some people bring cash with them from their home country to Mexico and exchange this for Mexican pesos.

Pesos can be bought for foreign currency cash at many retail banks, but the better places to sell your foreign currency for pesos are the exchange houses, Casas de Cambio—see notes below.

Exchange rate fees when buying pesos with cash

Most exchange houses and banks do not charge commissions to exchange currency but make money through the “spread”—that’s the difference between the rate at which they sell pesos and the rate at which they buy them.

Some exchange houses in need of certain units of foreign currency for their operations (for example, if they need US dollars) will offer better rates on certain days than even perhaps the international exchange rate, so it pays to shop around at various exchange houses at the airport or downtown if you plan to buy pesos using foreign currency in cash.—

Currencies traded

Mexican banks and exchange houses will buy and sell all major currencies. US dollars, Canadian dollars, British pounds, euros, Australian dollars, and Japanese yen can be readily bought and sold across the counter at exchange houses and many retail banks.

Exchanging cash at the Casas de Cambio

The best place to exchange your foreign currency cash for Mexican pesos is at one of the local exchange houses, known as Casas de Cambio.

They tend to offer the best rates and their procedures for exchanging money are straightforward.

The ones at the Mexico City airport tend to offer the most competitive exchange rates; exchange houses situated in tourist hotspots offer the least attractive exchange rates.

Exchanging money using a local retail bank

Retail banks will exchange foreign currency cash for Mexican pesos, but their rates may not be as attractive as the local Casas de Cambio (check locally) and they might insist that you have a bank account with them to make the exchange.

Paying foreign currency cash at stores and hotels

Some stores might accept cash in foreign currency in payment of goods (exchange rates might not be favorable, though).

Hotels and resorts in Mexico are no longer allowed to accept cash payment in US dollars to settle stays, due to money laundering rules.

Transferring foreign funds to a Mexican bank account

If you have a bank account in Mexico, you can buy pesos by transferring money from your foreign bank account to your bank account in Mexico.

These funds get converted into Mexican pesos and become available for your use locally, where you can pay others electronically using online banking or a banking app; using your Mexican debit card to withdraw cash from a local ATM; or by making a cash withdrawal in person at the bank itself.

If you’re resident in Mexico this method is an efficient way to transfer funds from overseas accounts (e.g. your retirement income) to a Mexican bank where the pesos are held on account for your day-to-day use.  By transferring larger sums, you avoid ATM fees and save time and money in the longer term.

Cashing a US dollars paper check in Mexico

Some Mexican banks will cash a paper check drawn on a US bank and convert the sum into Mexican pesos. You usually need to hold an account at the bank where the check is cashed.

If you want to cash a US dollar check into Mexican pesos ask your local bank if it offers this service, and if it does, ask about what fees it charges and what exchange rate it applies to the transaction. Compare this against using an ATM to access your money or by making a transfer from your foreign bank account to a Mexican bank account.

The trouble with Travelers Checks

In a bygone era, Travelers Checks were the de-facto means for travelers to carry or transfer their money in a safe way for exchange into a local currency abroad. Paper-issued Travelers Checks have fallen out of favor as the widespread use of bank-issued ATM cards has made them obsolete.

While paper-based Travelers Checks are still accepted at some places in Mexico, they are difficult to exchange: the exchange rates offered are usually unfavorable and it’s often time-consuming to exchange them due to all of the verification steps that need to be undertaken.

“Plastic” Travelers Checks

The modern replacement product for paper-based travelers check is a plastic bank card —like a debit card issued by your bank and linked to your checking account— with a key distinction that they are not tied to a personal bank account.

Instead, you top them up with a cash balance from your bank account (or over the counter) and carry the card with you when you travel. When you need to draw cash from the balance on the card, you visit a local ATM to withdraw money in local currency.

They work like regular debit cards. Some electronic debit cards only allow use at ATMs, others also allow you to use them in stores; however, check with the card issuer about the foreign exchange charges they make for using the cards, as well as any other “per transaction” charges.

These ‘plastic card travelers checks’ are helpful if you don’t have a bank account in Mexico and want the convenience of using an ATM to obtain Mexican pesos, or if you don’t want to carry your bank cards in certain situations, for example, if you plan to travel into a remote region of Mexico and/or prefer to leave your bank cards at home or in the hotel when you’re touring.

Learn about managing your money in Mexico

Mexperience offers you a wealth of information about Mexico’s money, banking services, and banknotes.

• Learn more about managing your money in Mexico
• Articles about Mexico’s banknotes
• Latest articles about the Mexican peso
• Latest articles about Money and finance in Mexico

The information published in this article is provided for general information in good faith and is not intended as personal, legal, financial or investment advice.

Making international money transfers to and from Mexico

You can transfer money electronically to and from Mexico between bank accounts, or you can use an over-the counter international money transfer service.

International transfer to and from a Mexican bank account

If you have a bank account abroad and a bank account in Mexico, you can make an international money transfer using the special numbers provided by the banks.  You can make the transfer in one of two ways:

Direct interbank transfer

You instruct the bank abroad to wire the payment to a bank account in Mexico, or you instruct your Mexican bank to make a payment to a bank abroad.

Both the sending and receiving bank will make a charge for the transfer, and they will also make money on the exchange rate. Check with the banks to ask about fees and exchange rates.

Interbank transfer using an intermediary

If you are sending money to Mexico, you can optionally use a money transfer intermediary who will wire the money and usually offer a better exchange rate and/or lower fees than direct interbank transfers.

Wise (formerly Transferwise) and XE.com are examples of intermediary services.  Note that these only work on transfers to Mexico; if you want to wire money out of Mexico you must use a direct interbank transfer through a Mexican bank, you cannot use an intermediary.

Over-the-counter international money transfers

If you are transferring smaller sums and want to use over-the-counter money transfer services, here’s the general process:

• The person sending you money goes to their nearest money transfer agency and makes the payment plus associated charges, telling their local branch what city the money should be sent to
• The money is wired to that city and, to claim it, the recipient goes to an establishment that represents the agency (e.g., Western Union), shows a photo identification and claims the transferred amount using the reference number provided to them by the sender. To send money from Mexico to a destination overseas, it’s the same process in reverse.
• Over-the-counter transfers work for smaller sums of money, e.g., a small few thousand dollars at most; the agencies offering this service impose limits for transfer amounts and the fee structure they have make larger transfers unattractive.
• It’s more expensive to transfer money using an over-the-counter service than using an interbank transfer.
• The main money transfer agencies are Western Union and MoneyGram are two leading over-the-counter money transfer companies operating in Mexico. Some banks and stores are agents for these companies.

Money transfers within Mexico

If you’re in Mexico and need to transfer money domestically, there are two ways to do this without the need to write and post a check. (The writing and posting of paper checks is not a common practice in Mexico, nor is it recommended.)

Interbank electronic transfers

Transferring money electronically between two Mexican bank accounts is straightforward. You can transfer money instantly from your Mexican bank account to any other Mexican bank account using online banking (web browser), the bank’s app (using a smartphone or tablet), or by visiting the bank in person and authorizing the transfer of the money.

Over-the-counter cash transfers and deposits

Convenience stores in Mexico, including OXXO and 7-Eleven, offer cash-transfer and bank deposit services. Ask at your local OXXO or 7-Eleven for details about the services, transfer/deposit limits, and current fees.

Transfers: You pay cash at one of the convenience stores and pass a code to the intended named recipient.  That other person can attend the same brand  convenience store in their locality and, using the code and an official ID, can receive the cash.

Bank deposits: You can also pay money into some (not all) Mexican bank accounts from OXXO and 7-Eleven convenience stores.  There is a small fee for making the deposit, but it can be quicker and easier than going to the bank branch.

Learn about managing your money in Mexico

Mexperience offers you a wealth of information about Mexico’s money, banking services, and banknotes.

• Learn more about managing your money in Mexico
• Articles about Mexico’s banknotes
• Latest articles about the Mexican peso
• Latest articles about Money and finance in Mexico

The information published in this article is provided for general information in good faith and is not intended as personal, legal, financial or investment advice.

Mexico’s official currency

Mexico’s official currency is the Mexican peso. There are one hundred Mexican cents (centavos) to every peso.

• The symbol for the Mexican peso is $; its international currency code is MXN.
• To distinguish this from the dollar, you sometimes see it presented as MX$ or the value with the letters “MN” after it, e.g., $100 MN. The MN stands for Moneda Nacional, meaning National Currency.
• The Mexican Peso is a “free floating” currency in foreign exchange markets and like other similar currencies, its value against other world currencies fluctuates daily.

Discover Mexico’s banknotes and coins

In addition to its defined responsibilities for setting monetary policy, the bank of Mexico is responsible for the printing, minting, distribution, and management of Mexico’s physical currency.

Every ten years or so, bank note designs are updated to implement the latest in anti-counterfeit technologies.

Mexico’s banknotes are printed in denominations of 20-, 50-, 100-, 200-, 500- and 1,000-peso bills. The most seen and used are the 50-, 100- and 200-peso bills.

Mexico’s coins are minted in denominations of 50 cents, 1-peso, 2-pesos, 5-pesos, 10-pesos, and there are also some $20-peso coins in circulation.

Mexico’s current series of coins have remained unchanged for decades.  The old 20-cent coins are now out of general circulation and the 50-cent coins although still circulating are not often seen and used.

In addition to the bank’s standard set of current coins, commemorative coins have been introduced over the years which don’t tend to circulate widely as they are kept by consumers or bought by collectors.

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Mexperience offers you a wealth of information about Mexico’s money, banking services, and banknotes.

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An irony —economists would say corollary— is that the only times the peso has gone through periods of appreciation against the dollar has been in the decades when it was allowed to float freely, with no exchange controls in place, few or no price controls in the domestic market, and no restrictions on withdrawing capital or profits.

From controlled exchange rates to free-floating currency

Over the last seven decades or so, different governments have applied different measures for managing the peso’s exchange rate, depending on their perception of the country’s needs at the time.

From 1954 to 1976, the Mexican peso was held at a fixed rate of 12.50 (old pesos) to the US dollar.

A devaluation in 1976 was followed by a long period of different exchange controls which included outright restrictions at times, multiple rates at others, and a system of ‘exchange rate bands’ that allowed a steady but gradual depreciation of the currency.

A continuing series of devaluations through the late 1970s and 1980s —some major, some controlled— culminated in an economic blowout in December 1994, when the country’s reserves became depleted following a year of capital flight, and that led to a free-floating exchange rate that has been maintained ever since, with the central bank only intervening in times of distress in markets.

Mexico’s peso from the late 1990s to 2010

After briefly reaching 11.50 to the dollar in the late 1990s, the peso had several years of ups and downs, gaining to less than 10 to the dollar just before the global economic crisis of 2008. Since that crisis originated in the US, its effect on Mexico was much greater than it was on other countries which have fewer (or smaller) trade and investment ties.

The currency’s value buckled in August of 2008, falling from 10 to more than 15 pesos per dollar in March of 2009, as investors sold Mexican stocks and bonds, often for cash to change back to dollars to meet other obligations.

The decade from 2010 to 2020

Mexico survived the 2008 crisis largely intact, and by October 2010 the peso recovered about half of its lost value, trading at around 12.50 to the dollar.

From 2011 to 2014, the currency stabilized and traded inside a range of 13 and 14 pesos to the dollar; but in late summer of 2014, the peso began to slide again, and in November of that year it broke the psychologically significant ‘20-to-1’ level.

The peso continued to weaken throughout 2015 and 2016 and, after briefly touching a new low of 21.50 in January 2017, the peso began a robust rally, and by September 2017 it was trading at around 17.60 on foreign exchange markets.

The currency then stabilized again and from 2018 to 2020 it traded in a range of 18 and 20 pesos to the US dollar.

Spring of 2020 through 2024

Soon after the World Health Organization declared Covid a pandemic on March 11, 2020, the Mexican peso began to experience a rapid decline in value against the US dollar—briefly touching 25 pesos by the end of March 2020.

However, in late spring the peso began to quickly recover its poise, and by November 2020 the currency stabilized again to trade in a range of between 19 and 20 pesos to the dollar—and remained remarkably stable in that range during the two difficult years that followed.

The Mexican peso rallied strongly in 2023 and got the term ‘Super Peso’ trending on social media in response to the currency’s strength, although a weak US dollar is also contributing to the peso’s recent gains.

Mexico’s peso gained 15% against dollar by the end of 2023, with an average rate for the year of 17.74 pesos to the US dollar—the strongest the currency has been since 2015.

The peso built on those gains throughout the first half of 2024, trading in a range of between 16.70 and 17.10 pesos to the dollar.  Soon after the elections on June 2nd, the peso came under pressure and fell to trade above 18 pesos to the dollar—for the first time since the spring of 2023.

Predictions for the future value of Mexico’s peso

There are varying views on whether the peso is over- or under-valued at the present exchange rate. Different economists, including those at the Bank of Mexico, use different criteria to calculate what they believe a currency’s fair value ought to be, and therefore come up with different results and publish those estimates accordingly.

As we mentioned in the 2024 peso commentary article, economists are predicting that the peso will weaken again; but the simple truth of the matter is that no one can foretell its future value with any meaningful degree of precision—and a glance back at previous years’ estimates by the same groups of  ‘experts’ confirms that.

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Events that led to the creation of the UDI

Unlike the global financial crisis of 2008-2009, or even the Covid crisis of 2020, the Tequila crisis was a home-grown Mexican economic blowout. In 1994, a year of political unrest which included the armed Zapatista uprising in southern Mexico and the assassination in Tijuana of the ruling party’s presidential candidate, foreign investors fled the country with their capital. By the end of the year, central bank reserves were depleted, and the government was unable to pay its debts. The peso was allowed to float against the dollar, bringing about a sharp devaluation.

Commercial banks failed one after another as rising inflation and soaring interest rates left people unable to pay off credit cards, mortgages, car loans, and corporate loans. Thousands of people had their homes or cars repossessed.

UDI: a unit of value protected against inflation

In April of 1995, the Mexican financial authorities came up with a plan that would allow people to meet onerous bank requirements in order to obtain home loans, or to refinance existing mortgage loans.

The UDI was introduced. With an initial value of one UDI to one peso, the investment unit was linked to inflation, and its peso value would rise each day depending on the rise in consumer prices.

The Bank of Mexico publishes the value of UDI on its website. Daily values for the following two weeks are published on the 10th and 25th day of each month. The UDI’s current value is 7.11 pesos.

How UDIs operate in practice

Aside from mortgage loans, UDIs are used for investments that are protected against inflation, and some official measures still reference UDIs; for example, if you qualify for tax allowances when you sell your home in Mexico, the allowances for any capital gain on the residential property you sell are expressed in UDIs.

Interest charged on government bonds takes into account expectations for inflation over the life of the bond, with the idea that by the time the lender recovers the initial amount borrowed —say five, 10, 20 or even 30 years later— the loss of the peso’s value to inflation has already been factored in through the periodic interest payments.

The interest paid on UDI bonos —that is, government bonds denominated in UDIs— excludes inflation because the UDI’s value in pesos increases constantly. Therefore, UDI bonos carry a lower rate of interest. The government has issued UDI bonos for periods of three, five, seven, 10, 20 and 30 years.

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It may also seem natural to wonder whether Mexico, with its history of currency devaluations, financial blowouts, bank nationalizations, and periods of runaway inflation, might not be a risky place to keep savings.

It may come as a surprise, therefore, to learn that Mexico’s banks are well capitalized and were among the first in the world to fully implement the new stricter capital standards set by international financial regulators, known as Basel III.

Lessons learned from past crises

Mexico’s stable banking system, which even allowed it to weather the 2008-2009 crisis without too much problem beyond a non-critical increase in past-due loans, is the result of tough lessons learned during the so-called Tequila Crisis of 1994 and 1995.

Poor lending practices of times past were painfully brought to light by a series of political crises that led to massive capital flight, a peso devaluation, soaring interest rates, and the failure of a number of significant banks as they were unable to recover loans.

People lost jobs, cars, homes and businesses, and it took at least another decade for the country’s banks to start any significant lending again to consumers. The government bailed out the banks to the tune of US$100 billion.

IPAB: Mexico’s limited depositor insurance scheme

Mexico established limited deposit insurance in the wake of the 1994 financial crisis, replacing the blanket coverage under the previous system, which caused not only a major economic headache but also a political stink. The original bank deposit protection fund, Fobaproa, was replaced by the current bank savings protection institute known as IPAB.

What does IPAB cover?

IPAB insures bank deposits in qualifying institutions for up to 400,000 UDIs, which are inflation indexed currency units.

One UDI is currently worth about 7.90 pesos, so the total amount of money insured by IPAB is just over 3.1 million pesos (view current amount in US dollars).

The value of the UDI is updated and published daily on the Bank of Mexico’s web site, and is also quoted on some exchange sites under the code MXV

IPAB protects money up to the value of 400,000 UDIs in savings accounts, checking accounts, debit cards, payroll accounts, and certain investment accounts such as term deposits and certificates of deposit.

Detailed information on the qualifying institutions and the kind of deposits that are insured by IPAB, and on the limitations of the cover, is available in on the institute’s website at www.gob.mx/ipab; an A-Z list of covered institutions can be found here.

Who is covered by the IPAB deposit insurance?

A variety of financial institutions operate in Mexico offering deposit accounts and investment vehicles that, while perfectly legal, are not covered by the IPAB public insurance scheme. In the event of any problems that may arise, depositors may lose part or all of their deposits or investments as happened in this case with Monex.

Care should be taken to ensure that the organization where your deposits are held, and/or types of investments held, are protected under the scheme. Don’t take the institute’s word for it, cross-check directly with IPAB or your independent financial adviser, which provides a list of banks, financial institutions and types of investment that are covered.

Rule of thumb: Higher interest, higher risk

Clearly the safest place to keep savings in Mexico is at one of the larger banks, or one of those regulated by the government.

Interest rates have been rising recently but offers of higher yields from non-regulated investment firms also carry significant risk of losing your money to fraud, or if the firm gets into operational difficulties.

Another safe place to consider for parking your money in Mexico is in government bills and bonds. Several regulated banks offer different funds that invest in such instruments, and the government also has a program where individuals can buy those securities directly; you can find information online at www.cetesdirecto.com.

Learn about managing your money in Mexico

Mexperience offers you a wealth of information about Mexico’s money, banking services, and banknotes.

• Learn more about managing your money in Mexico
• Articles about Mexico’s banknotes
• Latest articles about Money and finance in Mexico

The information published in this article is provided for general information in good faith and is not intended as personal, legal, financial or investment advice.

The average rate for the year was 17.74 pesos to the US dollar, the strongest the currency has been since 2015.

Economic growth was much stronger than most economists had predicted at the start of the year. Gross domestic product is expected to have closed the year up by about 3.4%, compared with initial expectations of less than 1%.

The growth had a lot to do with conditions in the labor market, where unemployment reached record low levels in October and wages rose above the rate of inflation, leading to higher consumption of goods and services.

The US economy, a major source of demand for Mexican-made goods, investment and remittances, also had a better year than many experts had predicted.

Interest rates, exports, and remittances backed the peso again in 2023

Aside from yet another year of better-than-expected economic growth —economists tend to err on the side of pessimism— the peso was primarily supported in 2023 by:

• high local interest rates, which were raised to 11.25%; as well as
• record remittances from the US, which preliminary data indicate are likely to exceed US$60 billion, and
• a recovery in fixed investment, from domestic and foreign sources. (Fixed investment includes capital invested in things like plant, factories, and machinery, not just portfolio funds.)

Falling inflation also helped, ending 2023 around 4.5% after reaching its highest level in more than 20 years during the autumn of 2022.

The Bank of Mexico raised its reference interest rate from 10.5% at the end of 2022 to 11.25% in March, and then kept it at that level for the rest of the year. Higher interest rates help the peso as they are one of the factors which encourage investors to buy the currency.

Mexico’s tourism sector continued its recovery

Tourism continued to grow, even though the stronger peso makes Mexico relatively more expensive for foreign visitors. In January-October, the number of foreign visitors rose by 15% to 60.8 million, including people crossing into Mexico by land at the US border. The number of tourists with at least one overnight stay rose 11% to 34.1 million, and the number of tourists who arrived in Mexico using air transport increased 6.2% to 17.7 million.

What to expect for the Mexican peso in 2024?

Mexico’s peso is a free-floating currency on the world’s foreign exchange markets. It’s one of the world’s most-traded currencies and is the most-traded of Latin America’s currencies.

Most analysts predict a slight depreciation of Mexico’s currency this year.  That forecast is in part premised on an expectation that the Bank of Mexico will start gradually lowering interest rates as inflation gets closer to its 3% target—which could reduce the volume of speculative peso trades in currency markets.

The government is also planning a much larger budget deficit this year, which could have a negative effect on public debt. At the same time, the additional public spending is expected to contribute to economic growth.

Foreign investment is expected to remain buoyant, driven by a current trend of companies moving production to Mexico to be closer to their end consumers in the US.

In the central bank’s December 2023 survey, the median estimate for the exchange rate at the end of 2024 is 18.53 pesos to the dollar, with estimates ranging from 17.40 to 19.30 pesos per dollar.

The same survey estimates that economic growth in Mexico will be 2.3% this year, and inflation is forecast to end the year at 4.4%.

Currency and other key economic forecasts reflect what could be expected given estimates for inflation, economic growth, interest rates, and other economic variables —both in Mexico and the US— but they don’t consider extraordinary events as these are unknowns.

Exchange-rate predictions are subject to many variables and uncertainties, with consensus estimates shifting as events unfold and the exchange rate fluctuates in response to those events throughout the year.

Other things that influence the peso’s value

Key things that determine the peso’s exchange rate in the market include:

• investors who buy pesos to purchase Mexican stocks, bonds or to make other capital or financial investments;
• investors who sell pesos to buy dollars and transfer money into foreign investments, or to cover other financial obligations abroad;
• companies that use their earned pesos to buy dollars or other currencies to pay for imports or to cover foreign obligations;
• companies that sell their foreign currency to buy pesos to pay for exports or cover financial obligations in Mexico;
• banks and financial institutions that receive foreign currency remittances from abroad and pay those funds out in pesos—this will include foreign pension income and savings transferred here by retirees living in Mexico;
• and of course, foreign income derived from international travelers which tends to favor Mexico with a surplus given its popular tourism cities and resorts.

Aside from the US dollar, the Bank of Mexico publishes indicative daily rates for the peso against a number of other currencies, including the Canadian dollar, the euro, and the yen.

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The economy continued its recovery from the 2020 recession, and by the third quarter goods and services output had returned to 2019 “pre-pandemic” levels. Gross domestic product is expected to have ended 2022 up 3%, more than what most economists had been predicting for much of the year.

This was due to a pickup in manufacturing goods for export, and a continued recovery in services that had still been lagging somewhat after the Covid-related restrictions.

Interest rates, exports, and remittances backed the peso in 2022

Aside from better-than-expected economic growth and further employment gains, the peso was supported in 2022 by three principal factors:

• the Bank of Mexico raising interest rates;
• by exports rising to their highest level ever; and
• by record remittances sent from people in the U.S.

Inflation was a problem last year, as consumer prices rose by the most since the year 2000. This was mostly because of increases in the cost of food. The Mexican government helped to keep inflation down by subsidizing gasoline and diesel using extra money it earned from prices of crude oil exported by Pemex, the state oil company.

The rate of inflation started to recede toward the end of the year, and was 7.8% at the end of December 2022. Food prices, though, were up nearly 14%.

The rise in inflation led the Bank of Mexico to raise its reference interest rate from 5.5% at the end of 2021 to 10.5% at the end of last year. The higher interest rates help the peso as they encourage investors to buy the currency, but can also discourage consumers from spending or small firms from taking on credit to grow their business.

Remittances —money sent to Mexico by people living abroad, principally from the USA— reached $53.1 billion by November, 13% more than in the first 11 months of 2021.

Mexico’s tourism sector also grew in 2022

Tourism also grew. The number of foreign visitors in the January-October period rose 19% to 52.7 million, with spending up 49% at $22.5 billion. About 17.2 million tourists arrived by air, 56% more than the previous year, but there were 10% fewer tourists crossing the border and staying for at least one night.

What to expect for the Mexican peso in 2023?

Mexico’s peso is a free-floating currency on the world’s foreign exchange markets. It’s one of the world’s most-traded currencies and is the most-traded of Latin America’s currencies.

In Banxico’s December 2022 survey, the median estimate for the exchange rate at the end of 2023 was 20.80 pesos per dollar, with estimates ranging from 19.25 to 22 pesos per dollar.

As in 2022, economists are somewhat pessimistic about economic growth prospects for this year, expecting GDP to increase just 0.9%. But they also expect inflation to slow to 5.1%.

Currency forecasts reflect what could be expected given estimates for inflation, economic growth, interest rates and other economic variables, both in Mexico and the US, but they don’t consider extraordinary events as these are unknowns.

It’s worth noting that foreign current exchange-rate predictions are subject to many variables and uncertainties, with consensus estimates changing as events unfold and the exchange rate fluctuates in response to those events throughout the year. For example, in December 2021 the Banxico survey estimated the peso would close at around 20.65 to the US dollar; in fact the Mexican currency closed the year more than one peso stronger than that consensus estimate.

Other things that influence the peso’s value

What determines the exchange rate in the market are investors who buy pesos to invest in Mexican stocks and bonds; or dollars to shift money into US investments; companies that buy dollars to pay for imports or to make foreign debt payments, or that buy pesos to exchange dollars earned from exports; banks that receive remittances in dollars and pay them out in pesos; and of course, international travel which tends to favor Mexico with a surplus given its popular tourism resorts.

Aside from the U.S. dollar, the Bank of Mexico publishes indicative daily rates for the peso against a number of other currencies, including the Canadian dollar, the euro, and the yen.

Learn more about money and currency in Mexico

Read our latest articles and download free eBooks related to money and finances

• Free eBook: Guide to Money & Banking Services in Mexico
• A historical perspective on the value of Mexico’s peso
• Latest articles about money and finances in Mexico
• Discover Mexico’s banknotes
• Free eBook: Guide to the Cost of Living in Mexico

A stable year after a tumultuous 2020

The exchange rate fluctuated between 19.56 and 22 pesos per dollar during the year, finally closing out December at 20.50.

Unlike the previous year, there were no major upheavals to send the peso anywhere near to its previous low levels. The economy continued to recover in the first half of the year, although the third quarter saw a slight drop as services were affected by renewed Covid-related capacity restrictions at restaurants, malls and other public venues. Those were mostly lifted by September.

The peso was supported by several factors in 2021

Gross domestic product, which measures output of goods and services, is expected to have grown by 5.6%, recuperating much but not all of the 8.2% drop in 2020. Employment returned to pre-pandemic levels, and tourism picked up from a disastrous 2020 without yet returning to 2019 levels.

The loss of economic momentum in the second half of the year, and a rise in inflation to 7.4%, the highest since 2000, were negative for the peso. On the other hand, the Bank of Mexico raised interest rates to counter the inflation pressures, and remittances from the US continued to set new records, reaching nearly $47 billion by November, already more than the $40.6 billion received in all of 2020.

Also supporting the currency was that, unlike in many other emerging markets, the Mexican government didn’t go on a borrowing spree to support the economy during the shutdowns of 2020, and avoided raising public debt to levels that could compromise its credit ratings. The lower debt load supports Mexico’s credit ratings, and therefore the peso.

What to expect for the peso in 2022?

Mexico’s peso is a free-floating currency on the world’s foreign exchange markets; it’s among the world’s top most-traded currencies and is the most-traded of Latin America’s currencies.

The latest central bank survey was undertaken in mid-December 2021, with analysts estimating the exchange rate will end 2022 at at rate of 20.65 pesos to the US dollar—close to its current level.

Other forecasts in that survey are that the Mexican economy will grow 2.8% this year and that inflation will slow down to 4.2%.

Currency forecasts reflect what could be expected given estimates for inflation, economic growth, interest rates and other economic variables, both in Mexico and the US, but they don’t consider extraordinary events as these are unknowns.

As we have commented on these pages before, exchange-rate predictions are subject to many uncertainties and are seldom accurate. Consensus estimates go up and down throughout the year as the exchange rate fluctuates.

Other things that influence the peso’s value

What determines the exchange rate in the market are investors who buy pesos to invest in Mexican stocks and bonds; or dollars to shift money into US investments; companies that buy dollars to pay for imports or to make foreign debt payments, or that buy pesos to exchange dollars earned from exports; banks that receive remittances in dollars and pay them out in pesos; and of course, international travel which tends to favor Mexico with a surplus given its popular tourism resorts.

Aside from the U.S. dollar, the Bank of Mexico publishes indicative daily rates for the peso against a number of other currencies, including the Canadian dollar, the euro, and the yen.

New banknotes introduced in 2021

The Bank of Mexico issued two elegant new banknotes in 2021, a new 20-peso bill and a new 50-peso bill, which completed a banknote update program that started in 2018 with a new design for the $500-peso bill.

It also put into circulation a number of new 12-sided 20-peso coins commemorating historical events including the foundation of Tenochtitlan, the consummation of Mexico’s independence and the 100th anniversary of the death of revolutionary hero Emiliano Zapata.

Learn more about money and currency in Mexico

Read our latest articles and download free eBooks related to money and finances

• Free eBook: Guide to Money & Banking Services in Mexico
• Latest articles about money and finances in Mexico
• Discover Mexico’s banknotes
• Free eBook: Guide to the Cost of Living in Mexico

The peso’s fall and recovery in 2020

The peso had ended 2019 at about 18.90 to the US dollar following its most stable year in a decade. But as businesses prepared to shut down in the US and Mexico in March of 2020, the peso started to sell off heavily.  Toward the end of that month, it fell as low as 25.26 per dollar—its weakest ever level.

This was partly because oil prices were sinking on a global glut and shrinking demand, which would cause a loss of government revenue from crude oil exports and even greater financial difficulties for the state-owned oil company Petróleos Mexicanos, but also because neither traders nor economists knew what to expect in terms of economic growth.

Most were sure there would be a deep recession, and even the Bank of Mexico at one point thought that gross domestic product could contract by as much as 12.8% for the year as a whole. But after a 17% drop in output in the second quarter, the economy bounced back in the third quarter and continued growing in the fourth. Output of goods and services probably shrank about 9% in 2020.

Mexico’s exports, which are made up mostly of manufactured goods, recovered quickly and by November were above the levels they had been at a year earlier. Added to slow demand for foreign goods, which was not surprising when millions of people had lost their jobs, this led to a large trade surplus.

Supports that helped the Mexican peso to recover

Unlike governments in other countries, both in the developed world and in emerging market countries, the Mexican government chose not to take on a lot more debt to provide economic stimulus for businesses because, officials said, the interest on the extra debt would eat into budget resources for years to come.

The lower debt load supports Mexico’s credit ratings, and therefore the peso. As a result, the peso gradually recovered and ended 2020 at 19.95 pesos per dollar.

What also helped the currency was that the Bank of Mexico was careful when cutting interest rates, gradually lowering the overnight interest rate to 4.25%, still above the rate of inflation, while other central banks around the world had negative real interest rates, i.e., their short-term interest rates were less than inflation.

Another support for the peso was the increase in remittances from abroad, which had reached US$36.9 billion by November, up 11% and already more than the US$36.4 billion that Mexicans sent home in all of 2019.  Income from foreign tourists, however, was down by more than half at US$9.8 billion in the January-November period. The number of land border crossings also dropped because the U.S.-Mexico border has been closed for crossings considered nonessential since April.

What to expect for the peso in 2021?

Mexico’s peso is a free-floating currency on world foreign exchange markets; it’s among the world’s top most-traded currencies and is the most-traded of Latin America’s currencies.

As we have commented on these pages before, exchange-rate predictions are subject to many uncertainties and are seldom accurate. Consensus estimates go up and down throughout the year as the exchange rate fluctuates. The latest central bank survey was undertaken in mid-December 2020, with analysts estimating the exchange rate will end this year at 20 pesos to the US dollar, which is close to its current level.

Other forecasts in that survey are that the economy will grow 3.4% after shrinking 9% in 2020, and that inflation, that ended 2020 at 3.2%, will pick up slightly to 3.6%.

Currency forecasts reflect what could be expected given estimates for inflation, economic growth, interest rates and other economic variables, both in Mexico and the U.S., but they don’t consider extraordinary events as these are unknowns.

Other things that influence the peso’s value

What determines the exchange rate in the market are investors who buy pesos to invest in Mexican stocks and bonds; or dollars to shift money into US investments; companies that buy dollars to pay for imports or to make foreign debt payments, or that buy pesos to exchange dollars earned from exports; banks that receive remittances in dollars and pay them out in pesos; and of course, international travel which tends to favor Mexico with a surplus given its popular tourism resorts.

Aside from the U.S. dollar, the Bank of Mexico publishes indicative daily rates for the peso against a number of other currencies, including the Canadian dollar, the euro, and the yen.

New banknotes introduced in 2020

The Bank of Mexico also launched two new banknotes in 2020; a new $100 peso bill and a new $1,000 peso bill; these are part of an ongoing program to update the country’s currency’s banknotes.

Learn more about money and currency in Mexico

Read our latest articles and download free eBooks related to money and finances

• Free eBook: Guide to Money & Banking Services in Mexico
• Latest articles about money and finances in Mexico
• Discover Mexico’s banknotes
• Free eBook: Guide to the Cost of Living in Mexico

The peso-dollar exchange rate remained reasonably stable in 2019, despite a lack of economic growth and a lot of noise in the news about the financial difficulties of the state-owned oil company Pemex, which could also cause problems for the government’s international credit ratings.

The lowest the dollar fell against the peso was about $18.75, and the highest rate was $20.15 pesos per dollar, making it the smallest range between minimum and maximum rates in 10 years.  The exchange rate at the end of 2019 closed at $18.90 pesos per dollar; when in 2018 it closed at $19.66.  The average daily exchange rate in 2019 was $19.26 pesos to the dollar, compared with an average daily exchange rate of $19.24 in 2018: when measured using a daily average, data show that Mexico’s pesos has remained remarkably stable over the last 24 months.

Several things helped to make the peso one of the best-performing currencies against the US dollar in 2019. The government made efforts to keep to its budget deficit targets, even when this meant holding back some spending to avoid having to take on new debt. Tax revenue was less than expected because the economy didn’t grow.

The Bank of Mexico started cutting interest rates, but these remain relatively high and encourage buying of peso-denominated government bonds by investors seeking returns on their money. Other sources of dollar income —including international travelers and remittances from Mexicans abroad— increased despite the economic stagnation in Mexico, and the trade balance was positive, i.e., Mexico exported more goods than in imported.

The peso got off to a good start in 2020, with the wholesale exchange rate trading down to around $18.50 pesos to the dollar in mid-February.  A poll of private economists, taken in December 2019, revealed that the peso/dollar exchange rate was expected to end this year at around 20 pesos to the dollar. Economists’ forecasts reflect what could be expected given estimates for inflation, economic growth, interest rates and other economic variables, both in Mexico and the U.S., but they don’t take into account extraordinary events as these are basically unknowns.

Currency exchange rate predictions are often based on what economists call “fundamentals” —which include things like the country’s debt payments as a percentage of GDP, its trade balance (Mexico tends to have very small trade deficits), the rate of inflation, economic growth, etc.— but global economic and political events in particular have a tendency to sideswipe economists’ logic.

A practical example of how unforeseen events can cause abrupt changes to market values is the emergence of, and unfurling news about, the Coronavirus across the world: the event has created conspicuous fluctuations in values between the Mexican peso and the US dollar, as well as other currencies.

What most people want to know is what the exchange rate will do next, and here the Spanish expression “no tiene palabra,” or “it can’t be trusted,” is relevant.  The safest answer to this question is to say that most year-out forecasts are usually wrong—probably more a matter of random error than ineptitude: a banker once described currency forecasting as “a mug’s game.”