DEFINITION of MXN (Mexican Peso)
The MXN is the currency abbreviation for the Mexican peso (MXN), the currency for Mexico. The Mexican peso is made up of 100 centavos and is often presented with the symbol $ or Mex$. The name peso comes from the Mexican word "pesos," which means "weights," and refers to gold or silver weights.
BREAKING DOWN MXN (Mexican Peso)
The peso was originally issued by Spain and therefore named the Spanish dollar, which 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 overtime.
Following a period of hyperinflation and currency devaluation in the 1980s that occurred after Mexico defaulted on its external debt as a result of the 1970s oil crisis, the government of Mexico created a new peso, or "nuevo peso," to replace the original peso in 1993. The new peso replaced the old peso at a rate of 1:1000.
Like many emerging market currencies, the value of the peso fluctuates with 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 saw volatility fall and the value of the peso slowly climb. In the two years after the crisis, the value of the peso rose by as much as 30 percent against the U.S. dollar. Conversely, in the months following the election of President Donald Trump, volatility spiked, and as fears the NAFTA trade agreement might be ratified the peso plummeted, losing 20 percent of its value in three months.
The Mexican peso is the eighth most traded currency in the world and the most in Latin America.