The Mexican peso appreciated on Friday to its strongest position against the U.S dollar in over five years, with one greenback buying just under 18 pesos at the close of trading.

Bank of México (Banxico) data shows that one dollar was worth 17.97 pesos when North American markets closed, its weakest level against the Mexican currency since September 2017. The value of the dollar dipped to a slightly lower 17.95 pesos earlier in the day.

Data shows that the peso appreciated 0.86% against the dollar on Friday and 2.33% this week. It has gained 7.88% in value against the U.S. currency this year, making it the best performing major currency in the world in 2023.

As a result, one U.S. dollar now buys 1.54 fewer pesos than it did at the start of the year.

Citing analysts, the newspaper El Economista reported that a weakening of the dollar, strong inflows of remittances and expectations of higher foreign investment in Mexico — including from electric vehicle manufacturer Tesla — benefited the peso this week.

Positive economic data out of China increased appetite for risk assets and thus weakened the U.S. dollar, according to Gabriela Siller, director of economic analysis at Banco Base.

Jacobo Rodríguez, director of economic analysis at Black Wallstreet Capital, said that greater demand for pesos due to an increase in exports and remittances as well as tourist spending was benefiting the currency.

However, one of the “most significant” factors helping the peso are high interest rates in Mexico, he said. The central bank lifted its key rate to a record high of 11% last month as it continues to battle high inflation.

“The fact that we have higher interest rates than other nations causes investors to seek … investment [opportunities] here in Mexico,” Rodríguez said.

Banxico Governor Victoria Rodríguez noted Wednesday that core inflation – 8.38% in the first half of February – still hasn’t fallen much, raising expectations that the central bank will continue to lift rates. Its next monetary policy meeting is on March 30.

With reports from El Economista, El Financiero, El CEO and Bloomberg