The Mexican peso closed the day of May 15 with an appreciation of 0.91% or 15.9 cents, trading around 17.43 units per dollara level not seen since May 3, 2016.
So far this year, the peso has accumulated an appreciation of 11%, said Gabriela Siller, director of economic analysis at Banco Base, in a report. The specialist points out three factors that promote the appreciation of the peso.
1. The flows of dollars that arrive in Mexico for exports, remittances and foreign direct investment.
2. The restrictive monetary policy of Banco de México. Although the interest rate is not expected to continue to risemaintains a wide differential with respect to the interest rate in the United States.
3. The 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 as it is the most liquid currency in all of Latin America, so it is easy to exit Mexican peso positions in a short period of time if necessary.
He added that, in the short term, the peso may continue to appreciate, as there is an expectation that the Federal Reserve (Fed) of the United States will no longer continue raising the interest ratewhich causes capital to move from the United States to other countries, including Mexico.
However, in the medium term the peso could depreciate moderately, due to the possibility of recession in the United States, and it could worsen if the US Congress does not reach an agreement to raise the debt ceiling. Treasury Secretary Janet Yellen said the country could default on June 1 if the debt limit is not raised.
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