The peso closed weaker on October 21, falling 1.32% against the dollar as the dollar price in Mexico ended the session at 18.67 pesos, 25 centavos above the previous close. That made the Mexican currency the most depreciated in the world that day.
For readers checking the dollar price in Mexico now, the move also showed up in bank counters. Banamex listed a selling price of 19.18 pesos per dollar and a buying price of 18.10 pesos, a spread that reflects how fast market pressure can reach households and businesses.
Gabriela Siller said the peso was hit because carry trade positions kept being unwound as the interest-rate gap between Mexico and Estados Unidos narrowed. In plain terms, traders who had borrowed cheaply to buy peso assets kept pulling back, and that selling fed the slide. She also noted that the market is still pricing in a 25 basis-point rate hike by the Reserva Federal in December.
The weakness did not come in a vacuum. The session was marked by market nerves over the war in Irán and by expectations of higher U.S. rates, a combination that tends to favor the dollar when investors get cautious. Even so, the broader forecast is not for a collapse in the peso: La Encuesta Citi shows economists still see the dollar ending 2026 at 18.20 pesos, while they expect the Banxico rate to stay unchanged in both 2026 and 2027.
That gap matters because it captures the contradiction in the market right now. The peso can be the session’s weakest currency and still sit inside a longer view that assumes the exchange rate steadies later. What decides the next leg is whether the pressure from higher U.S. yields keeps building or whether the carry trade shakeout runs out of steam first.
For now, the message from October 21 is simple: the peso lost ground fast, but the market still sees room for it to recover long before the end of 2026.
