The Mexican peso appreciated again on Friday, reaching an exchange rate of 16.72 to the US dollar before weakening slightly.
The exchange rate at the close of markets on Friday was just under 16.74 pesos to the greenback, according to the Bank of Mexico. It’s the peso strongest position against the greenback since December 2015.
The US dollar depreciated just under 2.4% against the peso this week after buying 17.14 pesos at the end of last week.
The peso strengthened on Wednesday on the back of data that showed that annual inflation in the United States slowed to 3% in June. The decline in inflation in the United States makes it less likely that the U.S. Federal Reserve will raise interest rates later this month from the current 5% to 5.25% range.
Analysts cite the Bank of Mexico’s high benchmark interest rate – currently 11.25% – and the significant difference between that rate and that of the Fed as one factor in the current strength of the peso. Strong incoming flows of foreign capital and remittances are among the other factors cited.
President López Obrador celebrated the recent appreciation of the peso at his morning press conference on Friday, describing the currency as fortachón, or very strong.
The peso has appreciated over 14% in 2023, after starting the year at around 19.5 to the US dollar.
With reports from El Economista