News Latin America The Mexican peso breaks its seven-year record and is trading at 17.42...

The Mexican peso breaks its seven-year record and is trading at 17.42 units per dollar

A citizen shows the Mexican pesos that he carries in his wallet, in January 2021.Artur Widak (Getty Images)

The Mexican peso has broken the barrier of 17.50 pesos per dollar this Monday, reaching an appreciation against the US currency, a level not seen for seven years. During the day, the currency traded at 17.42 units per dollar. The peso closed the session with an appreciation of 0.91%, with the exchange rate reaching a maximum of 17.6192 and a minimum of 17.4207 pesos per dollar, not seen since May 3, 2016. Since the end of 2022 at the minimum As of this Monday, the peso accumulates an appreciation of 11%. While the peso strengthens, the dollar registered a downward session amid the discussion about the debt ceiling in the US.

According to analysts, the strength of the Mexican peso is explained by a combination of aggressive increases in interest rates, a relatively calm market, the flow of dollars that arrive in the country from exports and foreign direct investment, as well as an unprecedented level of remittances – the country received remittances for more than 58,000 million dollars in 2022. These factors have made the peso a darling among currency investors in the past year, and so far, the strength extends into 2023.

Gabriela Siller, Director of Analysis at Banco Base, explains that at the moment there is an international preference for investing in pesos. ”When there is no risk aversion, investors leave their positions in dollars and look for other assets that give them better returns. The Mexican peso is also preferred because it is the most liquid currency in all of Latin America, so it is easy to exit positions in Mexican pesos in a short period of time if necessary, ”she details.

The Mexican Stock Exchange closed with profits this Monday. The referential stock index reported an increase of 0.57% to 55,261.42 points, in full expectation of the monetary policy decision that the Bank of Mexico will issue this Thursday regarding the level of interest rates. Various analysts point out that this decision will mark the end of the cycle of rate increases that began in June 2021. Within the index, the shares of the mining company Industrias Penoles led the advance, with 4.80% more to 282.14 pesos, followed by by those of the airline Volaris, which added 4.16% to 22.02 pesos.

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