THE MND PESO INDEX™
Tracking the exchange rate people actually experience
MND Intelligence · Sixth edition
Welcome to the sixth edition of the MND Peso Index™, part of the MND Intelligence™ suite of data products developed by Mexico News Daily.
The MND Peso Index™ is a monthly purchasing power parity measure that assesses whether the Mexican peso is overvalued, undervalued or fairly valued against the US dollar by comparing the prices of a standardized basket of 20 goods and services in Mexico and Dallas, Texas.
Since we published the September index, the peso has been on quite a ride.
Between Sept. 2, the date on which we collected prices for the September index, and Oct. 6, the date on which we collected prices for this index, the peso depreciated 5.5%, trading at 16.98 to the dollar on the former date and 17.97 to the greenback on the latter date.
The peso’s depreciation was the decisive factor behind our first undervaluation finding for the currency since we launched the MND Peso Index™ in May.
Our headline finding for October 2026 indicates that the peso was undervalued against the dollar by 0.7%, a swing of 6.5 percentage points compared to the 5.8% overvaluation we determined in September.
For a detailed explanation of the purpose of the MND Peso Index™, the makeup of the basket and more, please refer to the index article we published in June. You can read even more about the index in our introductory article published in early May.
What did the MND Peso Index™ tell us in October 2026?
In October 2026, the MND Peso Index™ suggests that the USD:MXN exchange rate on the date we collected prices in various Mexican cities and in Dallas, Texas, undervalued the Mexican peso by 0.7%.
The Mexican and Dallas prices were collected on Oct. 6, 2026. The MND Peso Rate — the simple average of the 20 item-level implied exchange rates, rather than the rate produced by dividing the total Mexican basket cost by the total Dallas basket cost — came in at 17.84 pesos per dollar, compared with a Banxico FIX rate of 17.97 pesos per dollar on Oct. 6.
The gap between those two figures indicates that the peso — at a rate of 17.97 to the US dollar — was undervalued by 0.7% in early October.
In the table above, you can see the Mexico and U.S. prices for all 20 goods and services in the basket, the total costs of the two baskets, the implied exchange rate for each item, the MND Peso Rate (i.e., the overall implied rate), the Banxico FIX rate on the date prices were collected and the undervalued assessment for the peso.
Why did the peso go from overvalued to undervalued in just one month?
In contrast to September, the MND Peso Rate for October (17.84) is lower than the Banxico FIX rate on the date prices were collected (17.97).
As a result, the peso has gone from being overvalued against the dollar in early September, per the MND Peso Index™ methodology, to being undervalued against the dollar in early October.
The shift was primarily driven by the significant weakening of the peso, as mentioned in the introduction to this article.
The peso depreciated 99 centavos from 16.98 to the US dollar on Sept. 2 to 17.97 to the dollar on Oct. 6, per the Banxico FIX rates for those dates. The U.S. Federal Reserve’s Sept. 16 interest rate hike and increased investor risk aversion are among the factors behind the peso’s recent depreciation. The Fed’s hike narrows the gap between U.S. and Mexican interest rates, making peso carry trades less attractive to investors.
The MND Peso Rate declined 12 centavos from 17.96 in September to 17.84 in October, reinforcing the shift toward undervaluation. Had the MND Peso Rate increased by 1 centavo, rather than declined by 12, it would have been exactly the same as the Banxico FIX rate, indicating that the peso was trading at fair value under the index’s methodology.
In any case, the difference between the Oct. 6 Banxico FIX rate and the MND Peso Rate in October was just 13 centavos. Hence, the undervaluation assessment for the peso is minimal, indicating that it was trading close to fair value on Oct. 6.
The slight variation in the MND Peso Rate is due to month-over-month changes in the implied rates for some individual goods and services. The implied rates that changed due to price fluctuations are highlighted in the table above.
6 months of the MND Peso Index™
Through the use of the MND Peso Index™, we have now determined that the peso was overvalued against the US dollar by 2.8% in late April, 4% in late May, 2.9% in late June, 2.4% in early August and 5.8% in early September. That’s right — there were five consecutive overvalued assessments for the peso before this month’s determination that the currency was slightly undervalued in early October.
The difference between this month’s undervalued assessment for the peso and the highest overvalued assessment — that in early September — is 6.5 percentage points.
So far in 2026, the peso has depreciated around 2% against the US dollar. It closed at 18.00 to the greenback on the final day of 2025, according to the Bank of Mexico, while the closing USD:MXN rate on Tuesday, Oct. 13 was 18.38. If the Banxico FIX rate was 18.38 when we collected the prices for the Mexican and Dallas baskets on Oct. 6, the undervaluation assessment for the peso would have been 2.9%.
* Price sources: Mexico prices were collected from the websites and apps of Walmart México, Costco México, AutoZone México, Telmex, Cinépolis, Petco México, McDonald’s, Starbucks, Netflix, Spotify and Microsoft. Dallas prices were collected from their U.S. equivalents. The Banxico FIX rate of 17.97 published on Oct. 6, 2026, was used as the official exchange rate reference.
The post The MND Peso Index™ for October: Is the peso approaching its fair value? appeared first on Mexico News Daily