A detail of a sculpture depicting a five hundred peso bill is pictured at the Grupo Financiero Banorte headquarters in Mexico City, Mexico, January 16, 2024. REUTERS/Toya Sarno Jordan

By Gabriel Burin

BUENOS AIRES, Dec 3 (Reuters) - Mexico's peso will keep trading in 2026 close to the center of a range between 16.00-22.00 per U.S. dollar that recently turned 10 years old, a Reuters poll found.

The currency first entered the interval in July 2015. It has averaged a mid-value of 19.20 since then, only crossing the upper bound of 22.00 during the height of the COVID pandemic of 2020.

Now, the peso is forecast to weaken 3.4% to 18.92 in 12 months, from 18.27 on Tuesday, still near the center of the range, according to the median estimate of 22 analysts polled November 28-December 3.

"Risks surrounding our MXN forecast remain balanced, although with a slight bias towards depreciation," said Christian Admin de la Huerta Avila, an economist at Finamex.

This view is based on recent signs of weaker economic activity, less dynamic remittances and "the possibility of greater divergence between Banxico and the Federal Reserve," he added.

While the Mexican central bank - known as Banxico - is expected to continue its gradual policy easing, a divided U.S. Federal Reserve could halt rate cuts after an expected move this month.

This may eventually prompt bets against the peso at some point on the possibility of diminishing interest rate differentials currently favoring Mexico's unit.

Of 11 foreign exchange strategists who responded to an extra question on risks to their forecasts for the peso, five saw a weaker bias, three a stronger one, and three had a neutral view.

Elsewhere, Brazil's real is set to weaken 3.1% to 5.50 per dollar in one year, from 5.33 on Tuesday.

Year-to-date, the Brazilian currency is up 15.9%. The consensus forecast estimated the real at 5.38 by the end of 2025, implying a 14.9% gain this year that would be its biggest since a 21.8% appreciation in 2016.

The Mexican peso is up 13.9% so far in 2025, aiming at a 12.5% annual appreciation that would be the strongest since a 14.9% rise in 2023.

(Other stories from the December Reuters foreign exchange poll)

(Reporting and polling by Gabriel Burin in Buenos Aires; additional polling by Mumal Rathore and Renusri K; Editing by Bernadette Baum)