Mexican peso closes its best year in a decade; earn 4.87%

The Mexican peso depreciated in December against the American dollar, ending a streak of three straight periods with advances. But its movement took little away from the accumulated appreciation in 2022, which left the local currency as the best in 2022.

The exchange rate closed the last day of the hectic year at the level of 19.5089 pesos per dollar, against a close of 19.3081 in November, with official data from the Bank of Mexico (Banxico). This meant a decline of 20.08 cents, equivalent to 1.04 percent.

year against year, with a record of 20.5075 units per dollar in 2021, the local currency recovered by 99.86 cents, which are equivalent to 4.87 percent. It was its best performance in a year since 2012’s strong 7.88% move a decade ago.

At its best moment of the year, the exchange rate touched a minimum of 19.0402 units in November, its best level since February 2020, shortly before the coronavirus pandemic. Covid-19. Four months earlier, in July, the pair reached its maximum of the year at 21.0566 units.

USD/MXN

Of the 12 months of the year, seven were positive for the peso and in five it fell against the dollar. Among its achievements of the year, it stood out being located as the best currency against the dollar and staying away from its historical maximum of 25.50 pesos, which it reached in the pandemic.

Outperformed dollar advance

In this way, the Mexican peso ended the year as the best currency against the dollar, surpassing other emerging currencies such as the Brazilian real, the Peruvian sol and the Russian ruble. This was even more prominent in a context of strength for the American dollar.

The Dollar Index (DXY), which measures the greenback with a basket of six strong currencies, ended the year at the level of 103.49 units, with a gain of just over 7.8% against levels close to 95.97 units at which it operated at the end of the year. last.

The dollar strengthened against its main peers in a context of war, inflation and high interest rates. According to some analysts, it was this context that allowed the peso to appreciate, thanks to Banxico’s movements in the price of money.

By 2023, analysts expect the peso to begin to lose ground at the end of the current cycle of interest rate hikes. Banxico estimates the terminal rate at 11% and currently the price of money is located at the level of 10.50%, a historical maximum.

On the other hand, the increases in interest rates by the Federal Reserve have raised fears of recession in the world’s largest economy and our country’s main partner. The Chicago futures market shows an increase in bets against the peso.

jose.rivera@eleconomista.mx