The Mexican peso returns to the area of ​​16 units per dollar in the last part of the year

 

The Latin American currency starts the session with an appreciation of 0.51% due to the weakness of the US currency due to the expectation of US inflation

The Mexican peso has regained strength against the dollar on the eve of Christmas. The Latin American currency started Friday with an appreciation of 0.51% or 8.6 cents, trading around 16.95 pesos per dollar, with the exchange rate touching a maximum of 17.05 and a minimum of 16.94 pesos. per dollar, a level not seen since August 31 of this year. The return of the so-called superweight is due to the global weakening of the dollar while investors await the release of a key indicator of inflation in the United States.

The Director of Analysis of Grupo Financiero Base, Gabriela Siller, explains that the appreciation of the peso is due to the weakness of the dollar, which lost 0.22% this morning, according to the weighted index, accumulating a drop in the week of 0. .71% and reaching its worst level since July 31. The market continues to speculate that the Fed will cut the interest rate by 25 basis points in March 2024, which also causes the 10-year Treasury note rate to drop 3.6 basis points to 3.85 %. “The exchange rate hit the minimum in the session after the publication in the United States of the personal consumption price index, the preferred data to observe inflation by the Federal Reserve, which rose to an annual rate of 2.6% in November, below the market expectation of 2.77% and reaching its lowest level since February 2021,” he says.

During the session, the exchange rate is expected to trade in a range between 16.89 and 17.03 pesos per dollar. In the broad basket of main crosses, the most appreciated currencies today are: the Malaysian ringgit with 0.6%, the Mexican peso with 0.51%, the Norwegian crown with 0.33% and the Indonesian rupiah with 0.27%. A strong exchange rate lowers the cost of imports and debt denominated in dollars; other sectors such as tourism and oil resources are already suffering the effects of a superweight.

This gesture of strength of the Mexican peso occurs after months of depreciation after an upward first half of the year due to different factors, such as a greater influx of resources through remittances, mainly from the United States, as well as foreign direct investment, in addition of the monetary policy decisions of the Bank of Mexico (Banxico) supports the appreciation of the Mexican currency.