Core Viewpoint - The Mexican peso has shown strong performance in the first half of the year, reaching its highest level in over ten months, but there are growing concerns about a potential moderate depreciation in the coming year due to upcoming U.S. tariff decisions [1][2]. Group 1: Current Performance and Predictions - The Mexican peso has appreciated by 13.2% in the first half of 2025, making it one of the strongest currencies in Latin America, with the exchange rate rising from over 20 to approximately 18.7 against the U.S. dollar [2]. - A median forecast from 22 foreign exchange experts indicates that the peso may depreciate by 5.5% over the next 12 months, with an expected exchange rate decline from 18.72 to 19.80 [2]. - Analysts predict that the peso will depreciate to 20.13 per dollar by the end of the year, reflecting a 7% decline from current levels, indicating a general expectation of weakening in the medium to long term [2]. Group 2: Market Concerns and Influencing Factors - Market concerns are heightened due to the impending expiration of the U.S. tariff freeze on July 9, which could lead to renewed trade tensions if tariffs are reinstated [2][3]. - Barclays Bank's foreign exchange strategist noted that the current market has not fully priced in the extreme risks associated with U.S. tariff policies, suggesting that the peso could face additional depreciation pressure in a worst-case scenario [3]. - The Mexican peso's valuation is at a high stage, and technical factors may exert downward pressure, prompting short-term investors to realize profits and potentially lower the exchange rate [3]. Group 3: Recent Trends and Support Factors - On July 4, despite low trading volumes due to the U.S. Independence Day holiday, the peso strengthened slightly, closing at 18.6297, marking a 0.18% increase from the previous trading day [4]. - The peso has appreciated by approximately 1.18% since last Friday, reaching its highest level since August of the previous year, supported by a weaker dollar and favorable conditions in the Mexican economy [4]. - Factors contributing to the peso's strong performance include a high-interest rate environment in Mexico, which attracts international capital, and the relatively mild trade regulations from the Trump administration [4].