US Dollar vs Mexican Peso

The USD/MXN currency pair represents the exchange rate between the US dollar and the Mexican peso, or the number of Mexican pesos (the quote currency) necessary to purchase one US dollar (the base currency).

The United States dollar is the most widely transacted currency in the world and is held by the majority of central banks and financial institutions. It is the official currency of a number of nations, including El Salvador and Zimbabwe. As a result of its stability and dependability, the dollar is the preferred currency for international transactions and reserves. In addition, the dollar's predominance in international trade has significant implications for global exchange rates and economic policy, and it may serve as a benchmark for nations that wish to set or peg their currencies to the dollar's value.

The Mexican peso is one of the oldest currencies in North America, having been issued at par with the US dollar until 1857 when it ceased to be legal tender. In 1993, the Bank of Mexico changed its monetary policies and introduced the current version of the currency, by redenominating 1,000 old pesos into one ‘Nouevo’ peso. This followed several years of inflation and devaluation caused by the oil crisis of the late 1970s and Mexico's default on its external debt in 1982, which resulted in a severe case of capital flight.

The strong relationship between the United States and Mexico, which share a 2,000-mile border and have extensive cultural and economic ties, as well as its high liquidity and volatility, attract traders to this pair, which is considered "exotic" because the Mexican peso comes from an emerging market.