The Mexican peso continues killin' it
BUSINESS
26-05-2023

IFOTO: WEB
Publicado: 26-05-2023 10:41:58 PDT
These are the reasons behind its strengthening
This month, the Mexican currency reached a value of 17.42 pesos per dollar, its highest level since May 2016. With these numbers, the Mexican peso has managed to lead the list of emerging currencies with the best performance so far this year.
Furthermore, the Mexican peso has become the most liquid currency in Latin America. This means that it can be easily bought and sold, which generates confidence for investments. But what lies behind its great performance? Here are some reasons:
Increased inflow of dollars into Mexico. This sector has strengthened due to exports, foreign direct investment, and remittances. Let's remember that in 2022, remittances amounted to over 58 billion dollars.
Weakening of the US dollar. This factor has been motivated by the possibility of a recession in the US and the expectations that interest rates will stop rising to contain inflation. Both situations have made the US currency less attractive and investors see greater profitability in the Mexican market.
And why is the strengthening of the Mexican peso so important?
Firstly, because the financial cost of government debt decreases as a portion of it is in foreign currency. Additionally, the appreciation of our currency also helps reduce inflation by making imported goods cheaper. Some specialists have indicated that the peso is expected to maintain a good level of strength throughout 2023.

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