Mexico’s accumulated current account balance rose to 1.6% of GDP in the fourth quarter, up from 0.49% in the prior period.
That is an increase of 1.11 percentage points. These figures measure the accumulated current account balance as a share of GDP.
We view this sharp improvement in Mexico’s external accounts as a bullish signal for the Mexican peso. The late-2025 data suggest the country is on a stronger financial footing, which can attract additional capital inflows. This supports our view that derivatives strategies should position for peso strength versus the dollar in the near term.
This fundamental support adds to the wide interest rate differential that has helped the peso. That trend strengthened through 2025 as Banxico kept its policy rate at 11.25%. With USD/MXN already testing lows near 17.05 this month, this news could be the catalyst for a break below that key psychological level. We should therefore consider shorting USD/MXN futures or buying peso call options.
A stronger current account also changes the rate-policy outlook by giving the central bank more flexibility. Inflation is still a concern, but improved external stability may allow Banxico to start cutting rates sooner than the market expects. We should consider positioning in TIIE futures for a more dovish shift by the second quarter.
With this stronger data point, we expect implied peso volatility to fall as uncertainty declines. Last year, implied volatility for 3-month USD/MXN options averaged above 14%, and it may now trend lower. This favors option-selling strategies—such as covered calls or short strangles—which could become more attractive if volatility continues to compress.
This strength is not a one-off. It is further evidence that nearshoring is delivering measurable gains. Foreign direct investment in Mexico reached a record above $40 billion in 2025, and the current account data suggests this is feeding through into stronger exports and a healthier balance of payments. This structural shift supports a long-term appreciation view for Mexican assets.
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