Mexico City, May 15 (EFE).- The Mexican peso reached a new minimum against the dollar on Monday, not seen since May 3, 2016, to a greater extent driven by a weakening of the dollar, greater flows of dollars to the country and a preference to invest in the Mexican currency, among other external factors.
During the day, the Mexican peso appreciated 0.91% with an exchange rate of 17.43 per dollar at closing, and with a maximum of 17.6 pesos and a minimum of 17.42 pesos per greenback, according to Data from the Bank of Mexico.
These figures have not been seen for more than seven years, in addition to a cumulative appreciation of 11% so far this year.
Gabriela Siller, director of Economic and Financial Analysis at Banco Base, explained that this is due to factors such as dollar flows that arrive in Mexico for exports, remittances, and foreign direct investment.
Also, a restrictive monetary policy of the Bank of Mexico, the announcement of a possible pause in interest rate hikes and a wide differential with respect to the United States interest rate.
Siller also mentioned that there is “an international preference for investing in pesos”, since the peso is considered the most liquid currency in all of Latin America.
“The appreciation of the peso is favorable for the reduction of inflation, since the price of imported items decreases,” he said.
However, he specified, for remittance recipients and for exporters the effect is negative, since remittances lose purchasing power and exports become more expensive in relative terms.
For her part, Janneth Quiroz, deputy director of Economic Analysis at Grupo Financiero Monex, commented that this is part of the effects of a weakening dollar.
First, he mentioned reports published this Monday that keep the US economy “in a slowdown scene.”
The analyst also pointed out that nervousness is growing around the debt ceiling in the US, given concerns of a default on debt obligations with “very serious” implications such as the possible downgrade of its sovereign rating.
Quiroz added that the Mexican currency has benefited from future plans for the phenomenon of the relocation of supply chains in the country, also called “nearshoring.”
He said that on the northern border of Mexico, adjacent to the United States, interest in buying land and building industrial buildings, among other things, is growing, which means more dollars coming into the country.
He agreed that the interest rate differential and the forecast of a cap on the escalation of interest rates by the Mexican central bank increase interest in taking advantage of the benefits of investing in government securities.
