The Mexican peso strengthened in early trading versus the U.S. dollar on Wednesday, breaking the 17 pesos-per-dollar point for the first time since December 2015, as the dollar dipped ahead of the release of the U.S. Federal Reserve’s most recent meeting minutes.
The peso briefly hit 16.9761 per dollar in early morning trading Wednesday, up some 0.50%, before settling around 17.00.
“Today, investors are awaiting the publication of the minutes of the last Fed meeting, when it made the decision to keep rates unchanged,” CI Banco said in an analysis note.
Strong domestic consumption figures and consumer confidence published earlier in the day also helped lift the peso.
Mexican President Andres Manuel Lopez Obrador has over the past many months regularly touted what he calls the “super peso’s” strength.
The peso is expected to remain strong as money flows keep entering Mexico attracted by higher yields, which have grown more appealing thanks to the central bank’s monetary tightening cycle which brought rates to an all-time high.
Still, analysts have warned that a prolonged peso run could be
more harmful than beneficial
as it pushes up export prices, deflates the value of remittances from the U.S., as well as impacting Mexico’s large industrial sector.
According to Banco Base analysts, the peso – one of the best-performing global currencies against the dollar so far this year – was expected to oscillate between 16.96 to 17.09 per dollar throughout the day.
Source: El Financiero