President López Obrador hails the return of the ‘super peso’

The Mexican peso extended its winning streak to seven days in Friday morning trading, appreciating to 17.28 to the US dollar before weakening slightly.

Bloomberg data shows that the peso closed at 18.32 to the dollar on Oct. 25 before strengthening every weekday since then.

Line goes up
After weakening to over 18 pesos to the US dollar last week, the “super peso” has returned with a seven-day 6% appreciation. (Chris Liverani/Unsplash)

Shortly after 1 p.m. on Friday, the USD:MXN exchange rate was 17.44.

The peso’s appreciation to 17.28 represented a gain of 1.3% compared to its closing position on Thursday and an advance of 4.8% this week. The cumulative appreciation from the seven-day winning streak was about 6%.

The peso’s strengthening on Friday morning came after data out of the United States showed that job growth slowed more than expected in October. Data from the Bureau of Labor Statistics showed that U.S. employers added 150,000 jobs last month, 30,000 fewer than the number expected by economists. The figure for September was 297,000.

The latest data increases the likelihood that the U.S. Federal Reserve will leave interest rates unchanged after its December monetary policy meeting.

AMLO
AMLO hailed the return of the so-called “super peso,” as it has been dubbed after its strong performance against the U.S. dollar in 2023. (lopezobrador.org.mx)

The peso has benefited this year from the broad gap between the Bank of Mexico’s benchmark interest rate – currently 11.25% – and the Fed’s federal funds rate, which is set at a range of 5.25%-5.5%.

The peso made gains earlier this week due to a reduced aversion to risk and after the Fed announced on Wednesday that it was holding its funds rate steady. The peso has appreciated by around 12% this year after starting 2023 at about 19.5 to the dollar.

At his Friday morning press conference, President López Obrador described the currency as a “super peso” and “very strong.”

“This helps us. There are some disadvantages but there are more advantages,” he said.

Peso coins
Banxico’s consistent interest policies have helped the peso to record an excellent 2023. (Crisanta Espinosa Aguilar/Cuartoscuro)

“… The [state of the] economy has a lot to do with confidence so when a country has good macroeconomic numbers it’s a country with advantages because it attracts investment,” López Obrador said.

“It helps a lot if there is no devaluation, inflation is under control, there is no over-indebtedness and there is [economic] growth,” he said.

“And Mexico now has a very good reputation for public investment and a lot of foreign investment is coming in,” López Obrador added.

With reports from Reuters 

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