The Mexican currency is experiencing a historical appreciation of more than 12.3% against the dollar. Step from 19.5 units per dollar in the first half of the year to 17.12 at the end of the first half of 2023. This phenomenon is explained by the relocation of chains or nearshoring, remittances and a favorable outlook for inflation.

Enrique Covarrubias, chief economist at Actinver bank, pointed out that the dynamism in the year is due to the fact that the peso is an asset that depends on supply and demand, pointing out that there is still technical space to continue its advance to 16.5 units. per dollar and reach the tipping point for its stabilization.

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Meanwhile, Gabriela Siller, director of Economic and Financial Analysis at Banco Base, estimated that the Mexican peso could continue with positive variations until the third quarter of the year and reach 16.9 pesos per dollar.

Both analysts considered that the relocation of Asian companies to Mexican territory due to the US trade blockade of China has benefited investments. Another way of looking at it, he said, is that "the exchange rate should be close to 19.50 pesos per dollar, if there had not been nearshoring."

In addition, the Actinver economist indicated that Mexico is undergoing a downward trend in inflation, which could put pressure on interest rate cuts from the Mexican Central Bank. At the same time, the country has been distinguished by more favorable economic issues, such as a greater demand for Mexican products abroad, investment opportunities, and economic integration with the United States.

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Covarrubias highlighted that another great boost has been remittances to Mexico, which since last April registered the highest annual accumulated since there has been a record, for almost US$ 60,000 million.

The Banco Base analyst pointed out that in the administrative field the appreciation of the peso has benefited Mexico due to the reduction of inflationary pressures, due to imported merchandise.

While Covarrubias argued that the greater commercial integration with North America has boosted the productivity of companies in Mexico, which has managed to balance losses.

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Original note