Why does the Mexican peso rise?
Among the main factors for the appreciation of the Mexican currency are the differential between the interest rates of the Bank of Mexico (Banxico) and those of the Fed, the growth of remittances and the solid performance of foreign investment.
Although for now, the Mexican currency has shown a positive path, its behavior in the future is difficult to predict, since it will be linked to the advance of economic data and the monetary policy of the central banks of Mexico and the United States.
For now, in its latest announcement the Fed gave new economic projections, so they probably did not rule out raising the rate another half a percentage point this year, in light of a stronger-than-expected economy and a slower decline in inflation.
Alejandro Saldaña, deputy director of economic analysis at Ve por Más, said that under the assumption that the Banxico-Fed rate differential will be reduced soon, he estimates that the exchange rate will pick up soon, but he cut his estimate for the end of 2023 and 2024, to a range of 18.40 to 18.70 pesos per dollar and 19.70 to 20.00 pesos per dollar, respectively.
What are the advantages of super weight?
Among the advantages of having a strong exchange rate is that companies have a lower cost of imports, which would imply less inflationary pressure. In addition, debtors in dollars have lower financial costs.