Definition – What does U.S. Dollar Mexican Peso (USD MXN) mean?
The U.S. dollar Mexican peso (USD MXN) is a currency pairing whereby the U.S. dollar and the Mexican peso can be traded against each other. The USD MXN can be thought of as the dollar versus the peso – you short the dollar and go long the peso or go long the dollar and short the pound. The USD MXN is not among the most commonly traded currencies. The peso is often considered an emerging market currency with heavy ties to oil prices, so the USD MXN can be quite volatile.
ForexTerms explains U.S. Dollar Mexican Peso (USD MXN)
The USD MXN is an interesting pair because the Mexican economy is closely tied to the American economy. A strong American economy helps to bolster the Mexican economy, but if the peso starts to gain too much on the USD, it often has a chilling effect on the Mexican economy as the imported Mexican products lose their pricing edge compared to products from other countries. Mexico is not believed to be a currency manipulator, although the USD MXN did see some interesting shake outs when Mexico entered the North American Free Trade Agreement with the U.S. and Canada. The currency was initially overvalued and took some sharp hits in the 1990s before stabilizing against the dollar.