The peso closed the first quarter of the year with a profit of 7.45%, equivalent to 1 peso with 45 centstrading around 18.05 units per dollar, with the exchange rate reaching a maximum of 19.53 on January 3 and a minimum of 17.89 units per greenback on March 9, a level not seen since September 26, 2017.
This is the best appreciation of the Mexican currency since the fourth quarter of 2020 and it ranked as the most appreciated currency among the main crosses, said Gabriela Siller, director of economic analysis at Banco Base, in a report.
According to the specialist, the appreciation of the peso was due to the following factors:
- Speculation that the Federal Reserve is close to completing the cycle of interest rate increases. This expectation was supported by the gradual decline in inflation, which in February stood at 6.0% annual, accumulating eight consecutive months of decline since the peak of 9.1% in June.
- Expectations of a more restrictive monetary stance by Banco de México. Because inflation in Mexico has slowed down, in February the Governing Board decided to raise the target rate by 50 base points, surprising the market, which was anticipating an increase of 25 base points. In March, Banxico made a second increase of 25 base points, taking the rate to 11.25%.
- Positive prospects for investment in Mexico and better-than-expected growth indicators. The appreciation of the peso has been supported from a fundamental approach by the flows of dollars to the country, by way of exports, remittances and foreign direct investment. On March 1, Tesla announced the construction of an automobile plant in Nuevo León, which is expected to be accompanied by other investments related to the automotive sector.
On the other hand, Wall Street posted gains both in March and in the first quarter, despite concerns about the path of interest rates of the Federal Reserve (Fed) and the recent banking crisis, spurred by the recovery in technological values.
In the accumulated monthly, the Dow Jones Industrials gains 1.87%; the selective S&P 500 4% and the Nasdaq index 7.40%apparently leaving behind fears for banking health after the collapse of Silicon Valley Bank (SVB) and Signature Bank and the emergency measures by the authorities.
The first quarter also shows green figures, especially good for the Nasdaq, which rises a cumulative 16.8% and marks its biggest quarterly rise since 2020; followed by the S&P 500, which is up 7.03%, and the Dow Jones, which is up a modest 0.38%.
While the Mexican Stock Exchange (BMV) lost 0.54% this Friday in its main indicatorto settle at 53,904 units, but despite this loss in March it advanced 2.27% to close the quarter with a gain of 11.23%.
“During the first quarter of the year, the capital market posted gains for most indices, driven by the expectation of a less restrictive monetary stance in the United States due to inflation showing a gradual downward trend,” he explained to EFE the director of Economic and Financial Analysis of Banco Base, Gabriela Siller.
With information from EFE.
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