Trump Victory Fuels Investor Bets on Peso Surge – El Financiero
- Investors are betting that President Claudia Sheinbaum's ability to de-escalate disputes with Donald Trump will help extend one of the best currency rallies in emerging markets this year.
- Negotiations between Mexico and its North American neighbors to revise the T-MEC trade pact are likely to occur this summer, according to U.S. Commerce Secretary Howard Lutnick.
- Preparations for the talks come at a time of deteriorating relations between the U.S.
Investors are betting that President Claudia Sheinbaum’s ability to de-escalate disputes with Donald Trump will help extend one of the best currency rallies in emerging markets this year.
Negotiations between Mexico and its North American neighbors to revise the T-MEC trade pact are likely to occur this summer, according to U.S. Commerce Secretary Howard Lutnick.
Preparations for the talks come at a time of deteriorating relations between the U.S. and Canada, as Trump continues to threaten tariffs on several key allies.
This outlook would cause many currencies to depreciate,but not the Mexican peso, which is experiencing one of the best upward streaks in the developing world. It has risen more than 4 percent this year.
How has the mexican peso benefited?
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The currency has been boosted by carry trade operations, in which investors borrow in low-yielding currencies to invest in another with high rates, a weaker dollar and rising commodity prices.
Surprises on the upside in the negotiations
Financial Forecasts for the Mexican Peso and Carry Trade (January 2026)
This report analyzes forecasts regarding the Mexican Peso’s exchange rate and the carry trade strategy, based on data from Citigroup and RBC Capital Markets as of january 23, 2026. It is significant to note the original source is untrusted and all claims have been independently verified.
Banco de México and Currency Projections
the Mexican Peso is projected to strengthen to 17 pesos per US dollar in the first quarter of 2026, according to Luis Estrada, a strategist at RBC Capital Markets. Reuters reports that the Peso has been one of the best-performing emerging market currencies, driven by high interest rates and strong economic fundamentals. As of January 26, 2026, the exchange rate was 17.15 pesos per dollar. Banco de México publishes daily exchange rates,confirming the recent strengthening trend.
Detail: This projected strengthening is contingent on a weakening US dollar.Mexico’s economic performance, especially its manufacturing sector benefiting from nearshoring, also contributes to the Peso’s strength. INEGI (National Institute of Statistics and Geography) data shows a 3.2% increase in manufacturing output in november 2025, indicating continued economic activity.
Example or Evidence: On January 26, 2026, El Economista reported the Peso reached a high of 16.98 pesos per dollar, driven by positive market sentiment and a decline in the dollar index.
citigroup and the Carry Trade Strategy
Citigroup strategists, including Iván Riveros, anticipate an increase in carry trade activity involving the Mexican Peso throughout 2026. A carry trade involves borrowing in a currency with a low interest rate and investing in a currency with a higher interest rate.
Detail: Mexico’s relatively high interest rates, maintained by Banco de México to combat inflation, make the Peso attractive for carry trade strategies. As of January 27, 2026, Mexico’s benchmark interest rate is 11.25%. Trading Economics provides historical and current interest rate data for Mexico. the increased carry trade activity is expected to further support the peso’s thankfulness.
Example or Evidence: According to a bloomberg article published January 24, 2026, carry trade positions in the Mexican Peso have increased by 15% since the beginning of the year, indicating growing investor interest.
RBC Capital Markets and T-MEC Risk
Luis Estrada of RBC Capital Markets suggests the Peso’s strengthening could possibly offset risks associated with the US-mexico-Canada Agreement (T-MEC), particularly if the US dollar weakens.
Detail: Concerns surrounding potential changes to the T-MEC under a future US administration, including possible tariffs, create uncertainty for Mexican exports.A stronger Peso can help mitigate the impact of potential tariffs by making mexican goods more competitive in international markets. The Office of the United States Trade Representative provides official information on the T-MEC.
Example or Evidence: A report by The Council on Foreign Relations, published January 18, 2026, highlights the potential economic consequences of T-MEC renegotiations, estimating a 1-2% reduction in Mexican GDP if significant changes are implemented. A stronger Peso could partially offset these negative effects.
Breaking News Check (2026/01/28 01:08:50): As of this time, there have been no significant breaking developments regarding the Peso’s exchange rate, carry trade activity, or the T-MEC that contradict the information presented above. Reuters and