Peso, the second most appreciated currency in the first days of 2023

The Mexican peso is the second most appreciated emerging currency against the dollar in the first three days of operations of 2023, with a gain of 0.57% or 11.04 cents.

This Wednesday, the peso presented a slight fall of 0.06%, closing at 19.3985 pesos, according to data from the Bank of Mexico (Banxico). In the session, its lowest level was 19.2578 in electronic operations, a minimum of one month.

“The factors that drove the appreciation of the peso-dollar exchange rate in 2022 have not deteriorated,” said Janneth Quiroz, deputy director of Economic Analysis at Monex Casa de Bolsa.

He recalled that the factors that have supported the peso since 2022 are the rate differential between Mexico and the United States (which has led to a greater inflow of foreign investment to government bonds), the growth in exports, as well as the record inflow of remittances to the country and stable economic fundamentals.

The peso-dollar exchange rate closed 2022 at 19.5089 units, with an annual appreciation of 4.87%, making it the second currency that gained the most against the dollar.

It is expected that at least until the end of January the peso will remain below 20 units per dollar and even head towards the 2022 minimum of 19.0401,” Banco Base analysts said in a technical analysis.

The strength of the peso in the first days of January occurs despite the fact that the dollar index (which measures the strength of the greenback against a basket of six currencies) accumulates an advance of 0.68% since December 30.

royal loses strength

So far in 2023, the emerging currencies that have lost the most against the dollar are the Russian ruble and the Brazilian real, with a depreciation of 3 and 2.84%, respectively.

The real, which was the most appreciated currency in 2022, has been under pressure in recent days due to uncertainty over the arrival of Inácio Lula da Silva to the Brazilian presidency.

Other emerging country currencies that are also losing ground against the dollar are the Colombian peso, which has fallen 1.71%, the Argentine peso, which has depreciated 1.04%, and the Peruvian sol, which has lost 0.81 percent.

The most appreciated emerging currency so far this year is the South African rand, which gains 0.66% for a rand-dollar parity of 16.88 units. For its part, the Chinese yuan achieved a slight advance of 0.12 percent.

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sebastian.diaz@eleconomista.mx