The Mexican currency has gained currency from both countries with strong and emerging economies.
Six weeks after starting the six-year term of Andrés Manuel López Obrador (AMLO), the peso appreciated against the main currencies of both developed and emerging countries, thanks to the encouragement that exists on the issue of the bonds of the New Mexico International Airport (NAIM)
The CIBanco senior economic analyst, James Salazar, commented that the parity entered into a channel of appreciation because at the beginning of the administration of AMLO the level of the Mexican peso was close to 20.50 pesos and at the moment it is quoted in around 19.38 units.
The analyst of the bank specialized in currencies mentioned that the appreciation of the Mexican currency was explained basically by internal factors, especially in the part of the confidence that he began to give to the market with the announcement of his Economic Package for this 2019.
Salazar added that another favorable element for the peso was the announcement of the repurchase of NAIM bonds for 1,400 million dollars of the current government, where investors finally accepted the conditions for them to release their securities.
The external sector also contributed to the strengthening of the Mexican currency, mainly related to the prospect that the Fed would implement a less aggressive rate hike policy for 2019, where two increases would be expected at most, the CIBanco analyst said. .
The recovery of the Mexican currency is also explained by the weakness shown by the US dollar in the currency market, given the prospect that the Federal Reserve (Fed) would moderate the rate increases in 2019.
It is appreciated vs other currencies
Within the strong currencies, is the Canadian dollar, to which the peso has earned 5.53% in a month and a half, from 15.3599 to 14.5111 pesos per Canadian dollar.
The local currency has been revalued 5.21% against the pound sterling, going from 25.9841 to 24.6316 pesos per pound sterling, and 3.90% against the euro, going from 23.0416 to 22.1423 pesos per euro.
The Mexican peso also strengthened with currencies of countries with emerging economies, such as the South African rand, against which it showed an appreciation of 5.34% operating from 1.4708 to 1.3922 pesos per rand.
Compared to the Argentine peso, the Mexican currency advanced 4.63%, while against the Brazilian real it recorded a gain of 1.46% at 5.1980 pesos per real, and with respect to the Colombian peso, it registered an appreciation of 4.13 percent.
The area of analysis of the exchange market of MetAnálisis highlighted that the recovery of the Mexican peso of the current six-year period is basically derived from the increase in the interest rate of Banxico, which currently reaches a yield of 8.25 percent.
They said that the level of interest rate reached is attractive for investors, which encourages the entry of foreign flows to the market, generating a greater appreciation of the peso.
Source: El Economista
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