The peso continues to gain ground against the dollar and recording records, however, it could already be reaching its best level against the US currency and in the following months it will depreciate again. What are the reasons?
This Wednesday, the exchange rate broke the floor of 17 pesos per dollar and reached a price of 16.9761 pesos per dollar, something not seen since December 2015, and according to several analysts, this month the dollar could fall further before.
For the chief economist of Banco Base, Gabriela Siller, the Mexican currency appreciates in a period of 2 months, around 7%, to later rebound and rise approximately 4%, with this month it could close at a level of 17.74 pesos per dollar.
“The exchange rate in Mexico is going through a period of consolidation around 17 pesos per dollar, but everything seems to indicate that it will continue to fall and if it continues the same performance that it has observed since July of last year, it could in 2023 reach a minimum exchange rate of 16.74 pesos”.
In turn, Actinver’s deputy director of Economic Analysis, Ramón de la Rosa, explained to Forbes Mexico that the strength of the exchange rate is not only this year, but has been coming since 2022 and is due to remittances, foreign direct investment, tourism, the reactivation of the manufacturing sector and the interest rate differential with the United States.
According to the specialist, it is expected that by the end of the year the exchange rate will trade at 17.80, which would not represent a strong depreciation, since the interest rate differential between Banxico and the Fed will begin to have an effect. .
In this sense, he indicated that the US Federal Reserve (Fed) could raise its rate this month to 5.5%, while the Bank of Mexico will keep it constant at 11.25 until the end of the year, but with cuts of 25 basis points in November and December.
“What we expect towards the end of the year is that the rate rises to 5.5% in the United States and falls to 10.75 in Mexico, that would make the gain that has been so strong (the peso) stabilize and the exchange rate could close at 17.80”, detailed De la Rosa.
For the Actinver economist, at the beginning of August the depreciation of the Mexican currency could begin to be seen after the decision of the Federal Reserve in July, although it would not be at significant levels.
According to Monex, the Mexican currency accumulates an appreciation of 12.7% so far this year and is positioned as the second currency with the highest gains against the dollar, only behind the Colombian peso, and as the most appreciated among the most traded currencies. .
Despite the fact that the interest rate differential between Mexico and the United States could decrease, from 600 bp to 575 bp next month, the resilience of the US economy will continue to support the entry of dollars into our country via exports and remittances, which has allowed the positive sentiment on the Mexican peso to continue.
For Monex, the peso has been supported by high expectations about the nearshoring materializing, which could attract an additional flow of dollars.
Meanwhile, Citibanamex agrees that the strong inflow of remittances, tourism and other currency flows and in general some optimism about the Mexican economy linked to the relocation of value chains has boosted the peso, although this would change.
“Despite this, we expect a gradual depreciation of the peso, mainly due to a lower carry (given our expectation of two additional hikes by the Fed and a cut by Banxico in December) and weaker economic activity in the United States and Mexico. Due to the above, we expect a peso/dollar level of 17.8 within 3 months to end at 18.3 at closing”.
Meanwhile, Siller considered that next year, if there is no global risk aversion or greater risk aversion on Mexico, the exchange rate could reach a minimum level around 16.40 pesos per dollar after the elections.