The Mexican peso (symbol: $; code: MXN) is the currency of Mexico. Modern peso and dollar currencies have a common origin in the 16th–19th century Spanish dollar, most continuing to use its sign, “$”.^[1]

The current ISO 4217 code for the peso is MXN; prior to the 1993 revaluation, the code MXP was used. The peso is subdivided into 100 centavos, represented by “¢“. The Mexican peso is the 15th most traded currency in the world, the third most traded currency from the Americas (after the United States dollar and Canadian dollar), and the most traded currency from Latin America.^[2] As of 26 September 2021, the peso’s exchange rate was $23.51 per euro, $20.06 per U.S. dollar, and $15.85 per Canadian dollar.^[3]

History

Etymology

The name was first used in reference to pesos oro (gold weights) or pesos plata (silver weights). The Spanish word peso means “weight”. Compare the British pound sterling. Other countries that use pesos are Argentina, Chile, Colombia, Cuba, Dominican Republic, the Philippines, and Uruguay.^[4]

Real

The currency system in use in Spanish America from the 16th to 19th centuries consisted of silver reales, weight 3.433 grams and fineness 67/72 = 93.1%, as well as gold escudos, weight 3.383 g and fineness 11/12 = 91.7%. By the 19th century the silver real weighed 3.383 g, 65/72 = 90.3% fine, while the gold escudo’s fineness was reduced to 21 karats or 87.5% fine.

15-16 silver reales were worth a gold escudo, and eight-real coins of 24.44 g fine silver were widely called pesos in Spanish America and dollars in England and its American colonies. These pesos or dollars were minted from the rich silver mine outputs of modern-day Mexico and Bolivia and exported in large quantities to Europe and Asia. These pesos served as a global silver standard reserve currency until the start of the 20th century, and became the model for the various pesos of Spanish America as well as (among others) the United States dollar, Chinese yuan and the Japanese yen.^[5] Mexican silver pesos of original cap-and-ray design were legal tender in the United States until 1857 and in China until 1935.

First peso

While the United States divided their dollar into 100 cents early on from 1793, post-independence Mexico retained the peso of 8 reales until 1863 when the Second Mexican Empire under Emperor Maximillan commenced the minting of pesos divided into 100 centavos. The restored Mexican republic under Benito Juarez and Porfirio Diaz continued the minting of centavo coins in base metal or silver, as well as gold coins in pesos, but it had to revert the silver 1-peso coin to the old eight reales “cap-and-ray design” from 1873-1897 after East Asian merchants rejected or discounted the newly-designed peso coins.

The post-independence silver peso contained 27.07 grams of 90.3% fine silver (24.44 g fine) while the gold peso or 1/2 escudo contained 1.6915 grams of 87.5% fine gold (1.48 g fine). After most of Europe switched to the gold standard in the 1870s the gold peso substantially rose in value against the silver peso, until it became 2 silver pesos to a gold peso or a gold U.S. dollar by 1900. In 1905 the peso was solely defined as 0.75 g fine gold.

From 1918 onward the weight and fineness of all the silver coins declined, until 1977, when the last silver 100-peso coins were minted. The U.S. dollar was worth MXP 2.00 from 1905 to 1929, rising afterwards until it stabilized at MXP 12.50 from 1954 to 1976.

New peso

Throughout most of the 20th century, the Mexican peso remained one of the more stable currencies in Latin America, since the economy did not experience periods of hyperinflation common to other countries in the region. However, after the oil crisis of the late 1970s, Mexico defaulted on its external debt in 1982, and as a result the country suffered a severe case of capital flight, followed by several years of inflation and devaluation. The U.S. dollar leapt from MXP 12.50 to MXP 19.40 in 1976, and again from MXP 23 to MXP 150 in 1982,^[6] stabilizing only in the early 1990s at above 3,000 MXP/USD when a government economic strategy called the “Stability and Economic Growth Pact” (Pacto de estabilidad y crecimiento económico, PECE) was adopted under President Carlos Salinas.

On January 1, 1993, the Bank of Mexico introduced a new currency, the nuevo peso (“new peso”, or MXN), written “N$” followed by the numerical amount.^[7] One new peso, or N$1.00, was equal to 1000 of the obsolete MXP pesos.^[7]

Series A and B banknotes

MXP $20000 (Series A, 1985)

MXN $20 (Series B, 1993)

The transition was done with minimal confusion by issuing the Series B “nuevo peso” banknotes in N$10, $20, $50, and $100 denominations with designs nearly identical to the corresponding banknote in the preceding Series A, which were labelled in old pesos (MXP $10,000, $20,000, $50,000, and $100,000, respectively); for Series B, the equivalent nuevo peso face value was 1⁄1000 of the old peso face value for Series A. For example, the Series A old peso MXP$20,000 and the Series B nuevo peso MXN$20 banknotes share the same design, aside from the updated face value. Old and new pesos circulated simultaneously between 1993 and 1995, but old peso Series A banknotes were gradually retired at this time, and newly-designed Series C “nuevo peso” banknotes commenced in 1994. From January 1, 1996 the “nuevo peso” was simply renamed to “peso”, and new Series D banknotes were issued identical to Series C except for the word “nuevo” dropped. The ISO 4217 code, however, remained unchanged as MXN. Series A and AA banknotes were demonetized and no longer legal tender as of January 1, 1996.^[8] Although they remain legal tender, Series B, C, D, and D1 banknotes are in the process of being withdrawn from circulation; in addition, the MXN$1000 Series F banknote is being withdrawn.^[9] The most commonly circulated banknotes in Mexico are MXN$20 and above in Series F and G.

Similarly, Series B coins in nuevo peso denominations were circulated starting from 1993^[9] and Series A and AA coins were demonetized starting from November 15, 1995.^[8] Unlike the notes, Series B coins differed in size and design from the Series A coins. Series C coins (which dropped the “N$” prefix on the MXN$1, N$5, N$10, N$20, and N$50 coins) were circulated starting in 1996 following the withdrawal of Series A and AA coins. Series B and C coins in uncommon denominations (10-centavo and MXN$20 and greater) are gradually being withdrawn from circulation. Although they remain legal tender, they are set aside when they arrive at commercial banks.^[9] The most commonly circulated coins in Mexico are MXN$10 and below in Series C and D.

The new Mexican peso, however, has continued to depreciate versus the U.S. dollar, with the dollar rising sharply from MXN 3.4 to MXN 7.2 after the Mexican peso crisis of December 1994. It would then trade at 9-12 MXN/USD between 1998-2008, at 12-14 MXN/USD between 2008-2014, and at 18-20 MXN/USD between 2016-2019.^[10] Notwithstanding these various difficulties the Mexican currency has experienced much less cumulative inflation when compared to several other currencies in Latin America, and the Mexican peso is now among the 15 most traded currency units.

Coins

Real

Coins issued from the 16th to 19th centuries under the Spanish American system of reales and escudos included

• in gold: 1⁄2, 1, 2, 4 and 8 escudos, with 1 escudo ≈ 2 pesos or 16 reales.
• in silver: 1⁄2, 1, 2, 4 and 8 reales, with 1 peso = 8 reales.

Additionally, Mexico issued copper coins denominated in tlacos or 1⁄8th real. Post-independence silver coins were of the cap and ray design showing a radiant Phrygian cap marked “Libertad” (liberty), which became familiar to East Asian traders. This design ended in 1872 with the minting of “centavo” coins except for the silver 8-reales which was revived as a trade coin from 1873-1897.

Peso, 19th century[edit]

The Second Mexican Empire of 1863-1867 commenced the minting of coins denominated in pesos and centavos, minting the copper 1-centavo, silver 5, 10 and 50 centavos, the silver 1-peso and the gold 20-peso. The last two coins featured the portrait of Emperor Maximilian on the obverse, and the imperial arms of the short-lived empire on the reverse.^[11][12]

The Restored Mexican republic of 1867 continued the minting of coins in pesos and centavos. The copper 1-centavo coin was continued; silver (.9027 fine) coins of 5, 10, 20, 25 and 50 centavos and 1 peso commenced in 1867; and gold coins of 1, 21⁄2, 5, 10 and 20 pesos commenced in 1870. The obverses featured the Mexican ‘eagle’ and the legend “Republica Mexicana”. The reverses of the larger coins showed a pair of scales; those of the smaller coins, the denomination.

In 1882, cupro-nickel 1, 2 and 5 centavos coins were issued but they were only minted for two years. Despite the discontinuation of the newly-designed silver peso in 1873, in 1898 the denomination on the “cap-and-ray” coin was successfully revised from “8 reales” to “1 peso” without being rejected in China; this continued to be minted as trade coinage until 1909. From 1900 the market value of the gold coins have approximately doubled versus their face values.

Peso, 20th century

In 1905 a monetary reform was carried out in which the gold content of the peso was reduced by 49.36% and the silver coins were (with the exception of the 1-peso) reduced to token issues. Bronze 1- and 2-centavos, nickel 5-centavos, silver 10-, 20-, and 50-centavos and gold 5- and 10-pesos were issued.

In 1910, a new peso coin was issued, the famous Caballito, considered one of the most beautiful of Mexican coins. The obverse had the Mexican official coat of arms (an eagle with a snake in its beak, standing on a cactus plant) and the legends “Estados Unidos Mexicanos” and “Un Peso.” The reverse showed a woman riding a horse, her hand lifted high in exhortation holding a torch, and the date. These were minted in .903 silver from 1910 to 1914.

In 1947, a new issue of silver coins was struck, with the 50-centavo and 1-peso in .500 fineness and a new 5-peso coin in .900 fineness. A portrait of José María Morelos appeared on the 1 peso and this was to remain a feature of the 1-peso coin until its demise. The silver content of this series was 5.4 g to the peso. This was reduced to 4 g in 1950, when .300 fineness 25- and 50-centavo, and 1-peso coins were minted alongside .720 fineness 5 pesos. A new portrait of Morelos appeared on the 1 peso, with Cuauhtemoc on the 50-centavo and Miguel Hidalgo on the 5-peso coins. No reference was made to the silver content except on the 5-peso coin. During this period 5 peso, and to a lesser extent, 10-peso coins were also used as vehicles for occasional commemorative strikings.^[13]

Between 1960 and 1971, new coinage was introduced, consisting of brass 1- and 5-centavos, cupro-nickel 10-, 25-, and 50-centavos, 1-, 5-, and 10-pesos, and silver 25-pesos (only issued 1972). In 1977, silver 100-pesos were issued for circulation. In 1980, smaller 5-peso coins were introduced alongside 20-pesos and (from 1982) 50-pesos in cupro-nickel. Between 1978 and 1982, the sizes of the coins for 20 centavos and above were reduced. Base metal 100-, 200-, 500-, 1,000-, and 5,000-peso coins were introduced between 1984 and 1988.