MXN (Mexican Peso): Definition, Symbols, History

What Is MXN (Mexican Peso)?

MXN is the currency abbreviation for the Mexican peso, which is the official currency of Mexico. The Mexican peso is made up of 100 centavos and is often presented with the symbol $ or Mex$. The name "peso" means "weights" and refers to gold or silver weights.

Understanding MXN (Mexican Peso)

The peso was initially based on Spain's official currency, known as real, which was the Spanish dollar minted in silver. The Mexican name originated from the most common denomination of the currency, which was the silver 8-real coin, and remained in circulation until the mid-19th century. In 1863 the first coins were produced that were denominated in centavos, and worth one-hundredth of the peso. These coins remained in circulation until the mid-20th century, but their content of gold was reduced substantially over time.

Following a period of hyperinflation and currency devaluation in the 1980s, which occurred after Mexico defaulted on its external debt as a result of the 1970s oil crisis, the government of Mexico in 1993 created a new peso, or nuevo peso, to replace the original peso. The new peso replaced the old peso at a rate of 1:1,000.

Like many emerging market currencies, the value of the peso fluctuates with the geopolitical and global sentiment. Generally, when global volatility is low, the peso appreciates, as seen in the years after the Great Recession. A slew of accommodative central bank policy initiatives saw volatility fall and the value of the peso slowly climb.

In the months following the presidential election of Donald Trump in 2016, volatility spiked, and, as uncertainty surrounding the North American Free Trade Agreement (NAFTA) heightened, the peso plummeted, losing about 20% of its value in three months. 

The Mexican peso is the eighth most traded currency in the world and the most traded in Latin America.