Mexican Peso Breaks 18 per Dollar as US Yields Hit Their Highest Since 2007

Banco de México’s reference rate and its official close both went above 18 on Tuesday, for the first time since March. Most of the pressure comes from Washington, where bond yields and bets on the Federal Reserve are pulling money toward the dollar.

The Mexican peso has crossed 18 per US dollar for the first time since March. Banco de México’s FIX, the central bank’s official reference rate, came in at 18.0710 on Tuesday 29 September 2026.

Most of the push came from Washington, not Mexico City. Analysts in the Mexican press point to higher US bond yields, bets on a Fed rate rise and a firmer dollar.

The first touch came on Monday 28 September, after regular trading had ended. The dollar reached 18.0059 at 3:30 p.m. Mexico City time in electronic trading, the financial daily El Economista reported.

Banco de México’s official close that day, cited by El Economista, was lower at 17.9445. The business outlet Expansión also reported that 18 was touched shortly after the close.

On Tuesday the peso broke through again during the session, and El Economista put the day’s high at 18.1503. The FIX, published from noon, came in at 18.0710.

This time the line held into the close. Banco de México’s official close, set between 1:55 and 2:05 p.m. Mexico City time, was 18.0635.

The peso lost 0.66 percent from Monday’s close, El Economista reported at 3:13 p.m. Mexico City time. El Financiero carried the same close in an update at 2:50 p.m. Mexico City time.

The FIX is a separate figure, not a closing price. Banco de México sets it each banking day as an average of wholesale market quotes.

Electronic trading also carries on after the official close, so later quotes are intraday, not settlement prices. That is why outlets can show different numbers for the same day.

Tuesday’s FIX was the first above 18 since 31 March. By that measure the dollar buys 4.4 percent more pesos than a week earlier.

The dollar also buys 6.2 percent more than at the end of August. Against the FIX of 16.8748 on 4 September, the strongest Mexican peso reading of 2026, the rise is 7.1 percent.

The main pressure is the price of money in the United States. The yield on the ten-year US Treasury bond, the benchmark for global borrowing, stood at 5.24 percent on Monday, Treasury data show.

That was its highest level since June 2007, and it rose again to 5.26 percent on Tuesday. Higher safe returns in dollars make riskier currencies such as the peso less attractive.

The Federal Reserve, the US central bank, raised its key rate by a quarter point on 16 September. The new range is 3.75 to 4 percent, and its statement said inflation “remains elevated”.

The median projection of Fed policymakers, published the same day, puts the rate at 4.1 percent at the end of 2026. That implies one more quarter-point rise this year.

Traders expect that rise soon. The CME FedWatch tool put the odds of an October increase at 68.1 percent on Tuesday morning, El Economista reported.

Later that day John Williams, president of the New York Fed, said he saw no urgency for another rise, Reuters reported. El Economista said his remarks trimmed those bets.

Behind the yields sits a larger number. US federal debt stood at US$40.1 trillion on 25 September, according to the Treasury’s daily count.

Expansión described the peso on Monday as caught between the Fed and record US debt. It wrote that investors are demanding ever-higher yields to absorb new US bond sales.

Energy added to the strain. Brent crude, the global benchmark, stayed above US$100 a barrel on Monday, Expansión reported.

The trigger was President Donald Trump’s rejection of an Iranian proposal to end hostilities and reopen the Strait of Hormuz. Costlier energy feeds fears of stubborn US inflation, and so of a tighter Fed.

For much of 2026, analysts say, the peso was lifted by the carry trade. Investors borrow in low-rate currencies such as the Japanese yen and buy higher-yielding Mexican assets.

Banco de México kept its own rate at 6.50 percent on 24 September. After the Fed’s rise, the gap between the two is 2.50 to 2.75 percentage points.

“As that differential narrows, part of the incentive to hold positions in pesos diminishes,” Janneth Quiroz told Expansión. She heads economic analysis at the Mexican financial group Monex.

Ramsé Gutiérrez, co-chief investment officer of Franklin Templeton in Mexico, described the pattern to the same outlet. “When a currency like the peso appreciates, it appreciates slowly, but the day it depreciates, it depreciates fast,” he said.

Speculators are pulling back, but they have not turned against the Mexican peso. Hedge funds and other speculative traders still held a net 79,188 futures contracts favouring the peso on 22 September.

That figure comes from the Commodity Futures Trading Commission, the US futures regulator. Its next weekly report will show whether the retreat continued.

The rate gap that props up the Mexican peso has narrowed, but it has not closed. Quiroz said contained inflation and fairly solid external accounts could prevent a deeper fall.

Victoria Rodríguez Ceja, governor of Banco de México, said the slide adds no inflation pressure beyond the bank’s forecasts. She spoke to the newspaper El Financiero in an interview published early on Monday.

She pointed to “balanced external accounts” and “an adequate level of international reserves”. She added that the floating exchange rate lets the peso absorb shocks from abroad.

When she spoke, the peso was still stronger than at the start of the year. By Tuesday’s FIX it had given that gain back.

The long view still tempers the headline. Tuesday’s FIX is only 0.4 percent above the last one of 2025, and below the 18.6233 of 6 November 2025.

Banco de México cannot move US yields, and it has said it will not copy the Fed. Its 24 September statement said Mexican policy “would not have to react mechanically” to expected US rate moves.

It did list a trend of peso depreciation among the risks that could push inflation up. It judged the overall balance of those risks as tilted upward.

Its next scheduled decision is on Thursday 5 November 2026, and minutes of the September meeting are due on 8 October. The bank’s calendar allows it to act on other dates if extraordinary events require it.

For foreigners in Mexico who earn in dollars, a weaker Mexican peso stretches their income further. For Mexican firms that import goods or owe dollars, the same move raises costs.

Banco Base, a Mexican bank, raised its forecast for the end-2026 rate to 18.20 from 17.80, Expansión reported. It sees possible spells above 18.50 if investors turn more cautious.

Speaking early on Monday, Gutiérrez said the move was still within normal swings for the currency. A similar week, taking the dollar toward 18.50, would open a debate about a disorderly adjustment, he said.

Our Global Economy Briefing follows the US bond moves each morning. For now, the peso’s direction depends less on Mexico than on the next US inflation figures and the Fed’s October meeting.