IPC Smashes All-Time High at 70,809 as Banxico Pauses Cuts and Peso Holds Near Two-Year Highs

Mexico’s financial markets delivered a statement week: the IPC index broke through all-time highs while the peso consolidated near its strongest level in nearly two years, a rare dual signal of confidence in Latin America’s second-largest economy. This is part of The Rio Times’ daily coverage of Latin American affairs and financial news.

The 4.75% weekly surge — adding over 3,200 points — was the IPC’s best performance since the post-pandemic recovery rally, and it came against a backdrop of global uncertainty that has punished most emerging market equities.

The catalyst was a convergence of three forces. First, Banxico’s February 5 decision to hold rates at 7.00% — the first pause since the easing cycle began in March 2024 — was read by markets not as hawkish restraint but as a vote of confidence in the economy’s resilience.

The unanimous decision, analyzed by BBVA Research, signaled that demand-side pressures are not the primary concern — rather, the board is watching tariff pass-through effects and the fiscal impact of excise tax increases before resuming cuts. Scotiabank maintained its forecast of a 6.50% terminal rate by year-end, implying 50 basis points of cuts still to come — but not until the tariff picture clarifies.

Second, the Trump administration and President Sheinbaum’s government unveiled a 60-day trade and critical minerals roadmap on February 4, signaling that despite the 25% tariffs on non-USMCA goods imposed since June 2025, both sides are working toward a managed trade relationship rather than an escalating confrontation.

The roadmap covers coordinated supply chain development, critical mineral extraction, and energy infrastructure — sectors where Mexico’s proximity and USMCA protections give it a structural advantage over Asian competitors.

Third, the nearshoring thesis that has driven Mexico’s equity rally since 2023 continued to deliver tangible results. Friday’s session saw broad-based gains across industrials, mining, and consumer sectors — precisely the segments benefiting from foreign direct investment relocating from China.

Industrias Peñoles surged 7.17% on the back of record silver prices ($81/oz ), while Grupo Bimbo (+6.75%) and Grupo México both hit record highs as the market priced in continued earnings growth from both domestic consumption and export-oriented manufacturing.

The peso, meanwhile, held firm at 17.24 per dollar — down from the 17.40 level seen earlier in the week after a brief correction. FX Empire noted that the carry trade “continues to pay those who take it,” with Mexico’s 7% rate offering a 250-basis-point premium over US rates — an attractive differential that has kept the peso among the world’s best-performing currencies in 2026.

The currency has now strengthened roughly 13% from its August 2024 peak above MXN 20 per dollar, a move that reflects both the carry appeal and the structural FDI flows reshaping Mexico’s balance of payments.

The IPC’s breakout above 70,000 is more than a technical milestone — it represents the market’s verdict on Mexico’s structural transformation. The index has now gained 33% over the past twelve months, outperforming the S&P 500, the Bovespa, and every other major Latin American benchmark.

The rally is built on three pillars: nearshoring-driven FDI (which hit a record $36 billion in 2025 ), corporate earnings growth averaging 18% year-over-year across the IPC’s industrial constituents, and a peso that has strengthened rather than weakened — compressing import costs and boosting dollar-denominated returns for foreign investors.

Banxico’s pause, however, introduces a new variable. The central bank’s statement explicitly cited “uncertainty surrounding trade policy” as a key factor — a diplomatic way of saying that Trump’s 25% tariffs on non-USMCA goods, in effect since June 2025, are creating inflationary pass-through risks that prevent further easing.

Scotiabank’s analysis suggests the pause will last through March at minimum, with cuts resuming only if tariff effects prove contained. For equities, this is a double-edged sword: higher-for-longer rates support the peso and attract carry-trade capital, but they also raise borrowing costs for the domestic consumer and SME sectors that have been driving GDP growth.

The peso’s strength at 17.24 is itself becoming a policy concern. While a strong currency reduces import costs and helps contain inflation, it also erodes the competitiveness of Mexico’s manufacturing exports — precisely the sector that nearshoring is supposed to benefit.

The weekly RSI on USD/MXN at 33.75 is deep in oversold territory (signaling extreme peso strength ), a level that has historically preceded at least temporary corrections.

The 60-day Trump-Sheinbaum trade roadmap provides a near-term floor for the peso, but any escalation in tariff rhetoric — particularly around the USMCA review — could trigger a rapid unwind of the carry trade that has compressed USD/MXN from 20.00 to 17.24 in six months.

S&P/BMV IPC Key Levels

USD/MXN Key Levels

IPC technicals: The weekly RSI at 73.78 has entered overbought territory for the first time since the October 2025 breakout rally, a reading that historically precedes 3-5% pullbacks before the trend resumes.

However, the daily RSI at 66.75 remains below the 70 threshold, suggesting the rally still has room to extend before exhaustion. The MACD is bullish across all three timeframes — weekly histogram at 429.20, daily at 56.29, and 4-hour at 34.63 — though the narrowing daily histogram warns of decelerating momentum.

Price closed above the upper Bollinger Band on both the daily (70,624) and weekly (69,370) charts, a condition that typically resolves through either a sideways consolidation or a sharp pullback to the 20-period MA.

The Ichimoku cloud provides robust support on the daily at 67,336, with the 200-day MA far below at 60,800 — confirming the structural uptrend is firmly intact.

USD/MXN technicals: The weekly RSI at 33.75 is deeply oversold — the most extreme reading since the peso’s 2024 rally peak — signaling that the dollar is due for at least a technical bounce against the peso.

The daily RSI at 38.34 confirms the oversold condition, with the stochastic RSI (signal at 29.12) flashing a buy signal for USD/MXN that has historically preceded 2-3% dollar recoveries.

However, the MACD remains bearish on the daily (histogram at -0.17) and the 4-hour chart shows only a tentative bullish crossover attempt (histogram at -0.017).

Price trades well below the Ichimoku cloud on both the daily (cloud base at 17.57) and weekly timeframes, and the 200-day MA at 18.50 is 7.3% above the current price — confirming that the dominant trend is peso strength.

The Bollinger Bands are narrowing on the 4-hour chart, suggesting a compression phase that will resolve with a sharp directional move in the coming sessions.

The coming week will test whether the IPC’s breakout above 70,000 can hold or whether overbought conditions trigger a healthy consolidation.

Three events dominate the calendar: Mexico’s January industrial production data (expected to confirm the manufacturing expansion driven by nearshoring), US CPI on Wednesday (which will reshape Fed rate expectations and the carry-trade calculus for the peso), and any developments on the Trump-Sheinbaum 60-day trade roadmap — particularly around critical minerals and energy infrastructure.

For the IPC, the 69,196-67,336 zone (upper Bollinger to 20-day MA) is the first support band — a pullback to this area would be healthy and consistent with the overbought weekly RSI.

For USD/MXN, the deeply oversold weekly RSI at 33.75 argues for a technical bounce toward 17.57 (Ichimoku cloud base), but the structural peso-strength trend — driven by 7% carry, nearshoring FDI, and diplomatic stabilization — suggests any dollar rally will be sold.

The wildcard remains tariff escalation: the 25% levy on non-USMCA goods is already priced in, but any expansion to USMCA-covered sectors would trigger a rapid peso depreciation and equity sell-off that the current positioning is not prepared for.

Key Facts

— Mexico is the standout story in Latin America — and arguably in all of emerging markets. An IPC at all-time highs, a peso at two-year highs, and a central bank that can afford to pause rather than panic is a combination that no other major EM can claim right now.

— The 33% twelve-month equity return, denominated in a strengthening currency, has delivered dollar-adjusted returns that rival the Nasdaq — and the nearshoring pipeline suggests the structural bid has years to run.

— But the weekly RSI at 73.78 on the IPC and 33.75 on USD/MXN (extreme peso strength) are flashing the same warning: the trade is crowded, the positioning is one-directional, and any tariff surprise or Fed hawkishness could trigger a violent unwind.

— The 60-day Trump-Sheinbaum roadmap buys time, but it does not buy certainty. For now, Mexico’s markets are pricing in the best-case scenario — and the risk is that reality delivers something less.