The weight It advanced this Tuesday against the dollar, supported by the entry of foreign currency into the country through Foreign Direct Investment, remittances and exports, and was placed at its best level since February 2020.
According to data from the Bank of Mexicothe national currency appreciated 0.33 percent, or 6.38 cents, which raised the exchange rate to 19.23 pesos per dollar.
Throughout the session, the peso reached a maximum level of 19.32 and a minimum of 19.04 units per dollar.
“The price of the Mexican peso against the dollar broke below 19.25 units and fell to 19.03, reaching its lowest level since February 2020. However, during the beginning of the session in the United States, the dollar began to recover ground ”, highlights OctaFX specialists
at the bank windowthe dollar was sold at 19.71 pesos per unit, according to data from Citibanamex.
The peso has positioned itself as one of the strongest currencies throughout the year, accumulating an appreciation of 6.20 percent against the dollar during the year. This is the best performance from him in a similar period, since 2017.
The strength of the Mexican currency is based on the interest rate differential between Mexico and the United States, the inflow of foreign direct investment, remittances and exports, as well as the solid macroeconomic fundamentals of the country, which have led to The peso is one of the few currencies that has appreciated against the dollar so far this year.
“The area of 19.00/05 it is an important support. A break down would open the doors to more gains for the peso. As long as it stays above, a consolidation between 19.00/05 and 19.25/30 looks likely. This positive outlook for the Mexican currency came amid a rally in emerging market currencies against the US dollar.
The dollar index (dxy), which measures the strength of the US currency against a basket of six developed country currencies, shows an increase of 0.15 percent to 106.84 points.
For the Bloomberg Dollar Index (bbdxy), a fall of 0.11 percent is reflected, in the thousand 279.54 integers.
In the money market, the yield of the 10-year M bond in Mexico is 9.57 percent, while the 10-year bond in the United States is located at a level of 3.75 percent.
Among the currencies that advanced the most against the dollar are:
- The Brazilian real, with 1.5 percent
- The Chilean peso, with 1.06 percent
- The South Korean won, with 1.03 percent
- The South African rand, with 0.89 percent
Jacobo Rodríguez, director of economic analysis at Black Wallstreet Capital, highlighted that the favorable performance of the peso has been throughout the year, and it is not a matter of a few days.
“Its strengthening has to do with the differential between interest rates with the united statesand the tickets to Mexicoon the side of remittances and direct foreign investment”, he highlighted.
However, there is a part that has been supporting the Mexican peso more recently and that has to do with the prospect that the officials of the Federal Reserve choose to moderate your interest rate increases.
Gabriela Siller, director of economic analysis at Banco Base, agreed that the inflow of foreign currency into the country is behind the strength of the local currency. exports, remittances, foreign direct investment and recently by foreign portfolio investmentAt the same time that bets in favor of the peso continue in the Chicago futures market, it is also expected that the Bank of Mexico keep up with the Federal Reserve.
In a recent report, the risk rating agency Fitch Ratingstressed that in the context of greater global financial and economic uncertainty, the external risks of Mexico are contained by the exchange ratethe narrow current account deficit that is financed with foreign direct investment flowsadequate levels of International reserves and a prudent monetary policy.
“These days the dollar has weighed on the expectation that the Fed could be less aggressive and even at some point reverse the rate hike cycleand to this is added that in Mexico the rates will continue to be very high, maintaining an extremely attractive spread for investors”, indicated Carlos Hermosillo, an independent analyst.
Eduardo Ramos, analyst at financial marketsfor ATFX LATAM, highlighted that the Mexican peso has managed to strengthen itself, prior to the US employment data this week and a Thanksgiving weekend where strong sales of black Friday marking a slow drop in the levels of inflation for the beginning of the year.
the force will continue
Analysts anticipate that the weight stay strong for several more weeks, and even appreciate near or below 19 units, although eventually local risk factors that have been dismissed should also be taken into account, so despite the fact that the peso has surprised a lot, it is possible that in the short term we will see an upward rebound, operating around levels of 19.50 or 19.80 units.
Banco Base analysts indicated that the exchange rate it could consolidate in a new channel between 19.18 and 19.30 pesos per dollar, opening the door to further appreciation.
Janneth Quiroz, deputy director of Monex analysis, pointed out that although the peso closed below the support level of 19.25 units, the break was weak, so we will have to wait to determine if after the consolidation period it maintains its favorable trend.