Mexico City.- The dollar falls in its crosses against the peso, in the midst of a global decline of the US currency, and this Monday it reached a price not seen in 7 years.
In the international currency market -or Foreign Currencies Exchange (Forex)- the peso touched a minimum price in the year of 17.4203 units per dollar, the lowest since May 2, 2016. So far in 2023, the peso accumulates a gain of around 11 percent.
While in the retail market, the dollar is sold at 17.90 pesos at Citibanamex windows, 12 cents less than its close on Friday.
The strength of the Mexican currency is due to three factors, according to Gabriela Siller, director of Economic Analysis at Banco Base.
In the first place, due to the influx of dollars into Mexico, driven mainly by exports, remittances and the greater uptake of Foreign Direct Investment (FDI).
In addition, the restrictive monetary policy of the Bank of Mexico (Banxico) has brought the interest rate to a level of 11.25 percent, thus maintaining a differential of 600 base points with respect to the rates of the US Federal Reserve.
This makes the Mexican peso more attractive for investment compared to other Latin American currencies, since it does not present macroeconomic risks in the short term. In addition to the above, investors continue to bet in favor of the national currency in the Chicago futures market.
In this context, the market’s sights are set on news about the US debt ceiling, while at the local level attention was directed to Banxico’s monetary policy decision that will be released on Thursday.
“This week will be characterized by having some liquidity as it is the monthly tax payment, but above all because the market will position itself before Banxico’s monetary policy decision,” Intercam Banco mentioned in an analysis note.
“In previous weeks, an increase of 25 basis points had been discounted for this meeting; however, recently, the possibility of keeping the reference level unchanged has taken hold in the market,” he added.
“Operators will look for clues about future monetary policy plans. For now, the idea that the Fed will not raise interest rates any more remains in the market,” CI Banco said in an analysis note.
