Saturday, April 20, 2024

The ‘super peso’ strikes again, hitting an 8-year high against the dollar

The Mexican peso appreciated to its strongest level against the US dollar in more than eight years on Wednesday morning, reaching 16.52 to the greenback.

The last time the peso was stronger was in October 2015, according to a long-range foreign exchange chart on the Yahoo! Finance website.

The peso appreciated around 0.7% against the dollar to reach 16.52 on Wednesday morning after closing at 16.64 on Tuesday.

The currency has appreciated around 1.4% this week, even though the differential between the Bank of Mexico’s benchmark interest rate and that of the United States Federal Reserve narrowed last Friday as a result of a 25-basis-point interest rate cut in Mexico.

The significant difference between the two rates — now 11% in Mexico versus 5.25%-5.5% in the U.S. — has benefited the peso for a prolonged period.

Janneth Quiroz, director of economic analysis at financial group Monex, said on the X social media platform that the peso benefited on Wednesday from the publication of data that showed that “Mexico’s economic activity could remain strong in 2024.”

Shipping containers at Lázaro Cárdenas port in Michoacán
Mexico’s economic activity is holding strong into 2024 and exports are up over last year. (Cuartoscuro)

She noted that data showed that Mexico’s exports increased 13% in annual terms in February and unemployment fell.

The peso — which appreciated around 13% against the dollar last year — has benefited for an extended period from strong incoming flows of remittances and foreign investment.

With reports from El Financiero

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