The Mexican peso depreciated to its weakest level against the US dollar in three months on Tuesday after losing ground against the greenback on four consecutive trading days.
Data from Bloomberg showed that the USD:MXN spot rate was 17.44 just after 1 p.m. Mexico City time.
A Bloomberg graph shows that the last time the dollar closed in a stronger position than that level was on June 5, when a greenback was worth 17.47 pesos.
The peso weakened by almost 2% last Friday after Mexico’s Exchange Commission (Comisión de Cambios) took the decision to reduce a six-year-old hedge program aimed at reducing currency volatility.
Janneth Quiroz, chief economist at Monex, said Tuesday that the peso has also been affected by an increase in investors’ aversion to risk due to signs that point to a cooling of the global economy.
Despite depreciating 70 centavos since last Wednesday, the peso remains in a much stronger position than it was at the start of the year, when the USD:MXN exchange rate was about 19.5.
Among the factors that have helped the peso appreciate this year are strong inflows of foreign investment and remittances, and the large gap between the Bank of Mexico’s key interest rate (currently 11.25%) and that of the U.S. Federal Reserve (5.25%-5.5%).
The consensus forecast of analysts recently surveyed by Citibanamex is that the peso will trade at 17.85 to the US dollar at the end of 2023.
Mexico News Daily
