
The Mexican peso is on track to finish its best performance since the end of 2012, when it appreciated 7.9%. The boost that the local currency has had has been supported by the Bank of Mexico's (Banxico)'s anticipated stance of interest rate hikes and by greater flows of dollars from exports, remittances and foreign direct investment.
At the close of this Wednesday, the Mexican currency ended at a level of 19.4205 units per dollar with an appreciation of 5.3% compared to the end of 2021, during the year it registered a range with a minimum of 19.1656 pesos and a maximum of 21.3327 pesos, according to Banxico.
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An element in favor was the monetary position of Banxico, which began to raise the interest rate from June 2021, reaching a level of 10.50% in December, accumulating an increase in the cycle of 650 base points and 500 base points only in 2022, being the highest increase on record in a single year. By comparison, the US Federal Reserve (Fed) raised interest rates by 425 basis points over the year.
The 600 base point differential that exists between the rates of the United States and Mexico has led to a greater inflow of foreign investment in government securities, particularly in Cetes, which helps a greater flow of dollars, said Janneth Quiroz, deputy director of economic analysis of Monex.
The emerging currencies have had to deal with the volatile behavior of the dollar since the expansion of the Fed's monetary policy began during 2022. Few currencies remained strong like the Mexican currency, which maintained until 12.28.2022, the best behavior against the dollar during 2022, with an appreciation of 5.30%.
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Another factor that analysts agreed on is that remittances continue at high levels, favoring the sale of dollars for Mexican pesos.
For 2023, analysts believe that it will hardly maintain the levels that have been observed in 2022, since there is an expectation of an economic recession in the United States, which will cause uncertainty and implications for the exchange rate.
The monetary policy of the Bank of Mexico is another factor that will influence the behavior of the peso, since the increases are likely to continue, although the most recent consensus shows that the end of the adjustment cycle is near. Banco Base specialists denoted that if the peso reaches levels above 20.50 pesos per dollar, it would imply a scenario of greater economic or political risk for Mexico.
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