“Super weight” will remain until 2023: Barclays

The English investment bank Barclays anticipated that the “super” peso will continue its positive streak in the remainder of this year and until 2023.

He predicted that the exchange rate will close next year at 19.00 pesos per dollar, which implies an appreciation of 4.15% compared to current levels (19.8227 units).

In addition, Barclays estimates that the peso-dollar parity will close 2022 at 19.75 units, which means a slight appreciation (0.36%) compared to current levels.

Erick Martinezexchange rate strategist at Barclays, explained at a press conference that the peso has been supported and will continue to be supported by the rate differential between Mexico and the United States, solid external and fiscal accounts, as well as the country’s political stability and the absence of capital outflows.

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Gabriel Casillaschief economist for Latin America at Barclays, commented that the peso has also been supported by an investment universe that is shrinking more and more, given the geopolitical and economic tensions that currently exist in the world, in addition to the relocation process of the production chains or nearshoring.

You put all that together and obviously Mexico is a sweetheart (for investments),” said Gabriel Casillas, director of analysis for Barclays in Latin America.

So far this year, the Mexican currency is one of the few that has managed to gain ground against the dollar, with an appreciation of 3.17 percent.

Martínez pointed out that the only scenario in which the exchange rate could lose its strength between the end of this year and 2023 would be in the event of a deterioration in the global risk environment.

“There are several points of tension, the Fed, the war, etc., so an additional shock could generate a more negative risk environment (…) We do not see anything in the domestic part (that could represent a risk), this would come from abroad”, explained the analyst.

Analysts said they disagreed with a report by Moody’s Analytics which indicated that the peso could depreciate up to 20% in the coming months (with the dollar trading above 24.00 pesos). They explained that given the expectation that there will be a recession in the United States, the safest thing is that the Federal Reserve (Fed) slow down the increase in interest rates, which would support the rise of the Mexican peso.

Erick Martínez pointed out that in the opinion of Barclays, a significant and sustained correction in the exchange rate would begin to be seen until 2024, with the increase in political uncertainty due to the presidential elections in Mexico.