Despite the reduced liquidity typical of the holiday season, the Mexican peso closed the week with notable gains against the dollar, surpassing a crucial psychological barrier. This performance, which some analysts called an “early Christmas miracle,” is not explained solely by year-end flows but by intense speculation surrounding the future of the Federal Reserve and potential rate cuts in 2026.
The Strong Performance of the Peso at the End of 2025
On Saturday, December 27, 2025, the peso reported gains against the US dollar, moving in a context marked by scarce economic data and reduced liquidity.
The Mexican peso gained ground from the start of the week, managing to break through the floor of 18 pesos per unit again.
- On December 23, one day before Christmas Eve, the exchange rate registered 17.94 pesos per dollar.
- For the early hours of Saturday, December 27, the exchange rate traded at 17.91 pesos per dollar, according to data from the online platform Investing.
This positive streak, which allowed the currency to surpass the 18-peso barrier, occurred while the market speculated about important definitions in global monetary policy.
Speculation About the Federal Reserve and the Cautious Banxico
The stability of the indicator is largely supported by international expectations. Gabriela Siller Pagaza, Director of Economic Analysis at Grupo Financiero BASE, noted in her analysis on December 26 that the market speculates the Federal Reserve (Fed) will continue cutting the interest rate during the coming year.
Regarding domestic monetary policy, Siller Pagaza indicated that Mexico’s central bank “could be more cautious and pause the cycle of interest rate cuts at the beginning of the year,” according to statements collected by Investing.
The expert also recalled a key year-end factor: liquidity in financial markets decreases in the days between Christmas and New Year, just as the flow of relevant economic information moderates.
The Future of Rate Cuts and the Weakened Dollar
The US dollar weakened after data did not change expectations for interest rate cuts.
The Reuters news agency reported on December 23 that the North American currency had weakened after certain data did not change expectations for Fed rate cuts for the coming year. That report led to thinking that the body will postpone the cut at its late-January meeting.
Erik Bregar, Director of Foreign Exchange and Precious Metals Risk Management at Siver Gold Bull, anticipated a complicated outlook for the North American currency:
“They could see a lower dollar in 2026, at least during the first quarter, since [the Fed] will be increasingly forced to admit that the labor market is not in a good place.”
Bregar indicated that the Federal Reserve could give in on rate cuts, taking into account the measures they took in the past, because “the market wants cuts.” He also referred to the probability that the next Fed chair will have a “moderate stance.”
The Shortlist for the Head of the Fed
Among the names most mentioned to occupy the presidency of the Fed are:
- Kevin Hassett: Favorite of Donald Trump and who has served as chairman of the White House Council of Economic Advisers.
- Kevin Warsh: Economist who was a governor of the Federal Reserve between 2006 and 2011.
- Christopher Waller: Current governor of the Fed, nominated to the Fed’s board of directors by the US president in 2020.
The Exchange Rate at the Counter on December 27
It is necessary to understand that each bank has its own fee for the exchange rate, which changes daily and depends on the financial institutions.
For December 27, these were the purchase and sale rates of Mexico’s main banks:
Institution | Purchase | Sale
Banorte | $16.65 | $18.25
BBVA | $16.84 | $18.37
The close of 2025 demonstrates that the peso’s strength is based both on internal factors of reduced liquidity and on the strategic decisions of the Federal Reserve that will project into 2026. The expectation of a weaker dollar in the first quarter and the possible cautious stance of the Mexican central bank outline a landscape of constant vigilance for investors. Will the peso be able to sustain this gain once global markets recover their usual liquidity?
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