20 Pesos (Fall of Mexico-Tenochtitlan) – Mexico

In 2021, Mexico's currency, the peso (MXN), demonstrated notable resilience despite significant global and domestic headwinds. The year began with the peso trading at approximately 20.0 per US dollar, strengthening to around 19.8 by year-end—a modest but meaningful appreciation. This performance was underpinned by high remittances from abroad, which reached record levels, and a relatively high interest rate differential compared to major economies, attracting portfolio investment. Furthermore, the global economic recovery and rising oil prices provided tailwinds for an export-oriented economy like Mexico's.

However, this stability was achieved against a backdrop of persistent challenges. Domestically, President Andrés Manuel López Obrador's (AMLO) policy direction, including initiatives that favored state-owned energy companies and heightened regulatory uncertainty, periodically weighed on investor sentiment. The Banco de México (Banxico) played a crucial role, proactively raising its benchmark interest rate from 4.25% to 5.50% over the year to combat inflation, which surged well above its 3% target due to global supply chain disruptions and rising commodity prices. This hawkish monetary policy helped support the peso by maintaining yield attractiveness.

Globally, the peso remained sensitive to shifts in U.S. monetary policy expectations and broader risk appetite. The prospect of tightening by the U.S. Federal Reserve and the persistence of the COVID-19 pandemic, particularly the Delta variant, created volatility. Ultimately, 2021 was characterized by the peso's ability to weather these storms, ending the year as one of the best-performing currencies among major emerging markets, a testament to the balancing act between Banxico's credible policy and the market's cautious view of the domestic economic landscape.