Mexico’s peso has shown resilience in early 2025, gaining about 3.2% against the U.S. dollar, but Wells Fargo expects it could weaken ahead. The currency remains overvalued, according to the bank, and faces growing headwinds—including a likely recession triggered by potential U.S. tariffs and the risk of sovereign credit downgrades.

Wells Fargo projects Mexican GDP growth of just 0.1% this year, with a recession likely by the second quarter. If broad 25% tariffs are imposed in April, the economic downturn could be deeper.

While any peso depreciation is expected to be gradual due to “tariff fatigue” and diplomatic efforts by President Claudia Sheinbaum, Wells Fargo says the risk of a sharp drop remains high.

Wells Fargo does not anticipate the Bank of Mexico it will intervene in currency markets if the peso weakens, allowing it to adjust in line with economic fundamentals.

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