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The Mexican peso breaks a new ceiling: 17.31 units per dollar

2023-06-07T21:02:30.418Z

Highlights: The Mexican peso broke a new barrier on Wednesday by trading at 17.31 units per dollar, a level not seen since May 2016. The currency started the session with an appreciation of 0.42%, equivalent to 7.2 cents. The good pace of the Mexican currency continues, now, in the expectation that the Federal Reserve will pause in the rate hike at its next monetary policy meeting. The greatest influence of the appreciation of the national currency, has been the weakness of the Turkish lira which has lost more than 15% since the re-election.


The currency starts this Wednesday with an appreciation on the expectation that the Federal Reserve will pause in the increase of rates in its next monetary policy meeting, the good forecasts of the OECD on the Mexican economy and the devaluation of the Turkish lira


A woman counts Mexican peso bills at a currency exchange house. Bloomberg Creative Photos

The Mexican peso broke a new barrier on Wednesday by trading at 17.31 units per dollar, a level not seen since May 2016. The currency started the session with an appreciation of 0.42%, equivalent to 7.2 cents, with the exchange rate touching a maximum of 17.4 and a minimum of 17.3 pesos per dollar, becoming the third emerging currency that presents greater gains against the dollar. The good pace of the Mexican currency continues, now, in the expectation that the Federal Reserve will pause in the rate hike at its next monetary policy meeting, the debacle of the Turkish lira and the upward forecasts of the OECD on

Financial optimism is shared with the forecasts of multinational organizations. On Wednesday, the Organization for Economic Cooperation and Development (OECD) improved its GDP growth expectations in Mexico for 2023, going to 2.6% while its forecast for next year remained unchanged at 2.1%. A good performance of private consumption will serve as one of the engines of national economic growth, accompanied by an unprecedented pace in the creation of new sources of employment. The figure is slightly lower than the forecasts of the Mexican Secretary of Finance and Public Credit, Rogelio Ramírez de la O, who has projected a growth of 3% at the end of the year.

According to the analysis of Intercam, the dollar has lost 1.3% of the ground gained during the month of May and this has also been reflected in the cross with the Mexican peso, however, the greatest influence of the appreciation of the national currency, has been the weakness of the Turkish lira which has lost more than 15% since the re-election of President Tayyip Erdogan, on May 28, and especially after the conflict that has been generated in recent months in the Bosphorus, a strait that connects the Black Sea with the Aegean and the Mediterranean and which has raised the cost of transit five times since the end of last year.

The president of Mexico, Andrés Manuel López Obrador, has boasted this Wednesday in his usual morning conference the strong exchange rate against the dollar. "This has not been seen since 2016 that it was like this. What has strengthened the weight is unique in 50 years. It is the currency that has appreciated the most in the world," he said this morning. A lot of investment is coming, foreign investors are welcome. And they know that there is security for investment in Mexico, that Mexico is a country with economic stability and political stability," he said.

In an environment where the dollar has weakened and the rest of the currencies have gained ground, the Mexican peso has taken the lead. Analysts agree in explaining the strength of the Mexican peso by a combination of aggressive increases in interest rates, a relatively calm market, by the flow of dollars that arrive in the country by exports and foreign direct investment, as well as by an unprecedented level of remittances – the country has already broken the record of more than 60,000 million dollars in money from abroad. These factors have made the Mexican peso the favorite among currency investors last year, and so far, the strength has been widening in the first six months of 2023.

For this day, exchange rate forecasts are in a range between 17.25 and 17.42 units per dollar.

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Source: elparis

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