Mexico’s accumulated current account balance rose to 1.6% of GDP in the fourth quarter. This was up from 0.49% in the previous period.
The figures show an increase of 1.11 percentage points. The data refer to the accumulated current account balance relative to GDP.
We see this sharp improvement in Mexico’s external accounts as a clear bullish signal for the Mexican Peso. The data from the end of 2025 shows the country is on a much stronger financial footing, which should attract more capital. This reinforces our view that derivative strategies should favor peso strength against the dollar in the near term.
This fundamental strength complements the high interest rate differential that has supported the peso, a trend we saw solidify throughout 2025 when Banxico held its policy rate at 11.25%. With the USD/MXN exchange rate already testing lows near 17.05 this month, this news could provide the momentum to break below that key psychological level. We should therefore consider shorting USD/MXN futures or buying peso call options.
The improved current account also alters the outlook for interest rate policy, giving the central bank more flexibility. While inflation remains a concern, this external stability may allow Banxico to consider an initial rate cut sooner than the market currently expects. We should be looking at positioning in TIIE futures to price in a more dovish stance emerging by the second quarter.
Given this robust data point, we expect implied volatility in the peso to decrease as uncertainty is removed. Last year, implied volatility for USD/MXN 3-month options averaged over 14%, but this could now trend lower. This suggests strategies that involve selling options, such as covered calls or short strangles, could become more profitable.
This strong performance is not an isolated event but rather evidence that the nearshoring trend is paying real dividends. Foreign direct investment into Mexico hit a record high of over $40 billion in 2025, and this current account data confirms it is translating into stronger exports and a healthier balance of payments. This structural shift supports a long-term appreciation view for Mexican assets.
