La Jornada – the peso at its best in history

Mexico City. The peso is set to record its best performance in its free floating history (1994) in 2023, gaining 13 percent against the dollar to 16.9501 units per dollar. place Till the last session of the year.

This behavior is due to inflow of capital through remittances, foreign direct investment, tourism and investment etc. near shore, which explains the good performance of the Mexican currency. In addition to the above, rate differences, since it is more profitable for international investors to buy government bonds in Mexico than in the United States, because yields are higher in Mexico, so more risk is accepted.

Since the exchange rate in Mexico has been volatile, and even before, it has not happened for two consecutive years that the Mexican currency has been on the platform of the strongest currencies against the dollar globally.

Amid dollar weakness during the year (devaluation of 2.2 percent), the Mexican currency was in second place, surpassed only by the Colombian peso (20.3 percent).

The Federal Reserve (Fed) is expected to lower its interest rates before the Bank of Mexico (BDM), widening the rate gap between Mexico and the United States, which has remained at more than 6 percentage points for more than a year. Is. , it continued to encourage investors to take risk-on positions, so the exchange rate could be locked in the range of 17 pesos per dollar by 2023.

In 2023, purchases of non-oil capital and consumer goods were boosted, attributed to the peso’s strength against the dollar; But on the other hand, the strengthening of the exchange rate hurt public finances through oil revenues as well as some exporting industries. Analysts predict that the peso will lose its luster in 2024.

For its part, the main Mexican stock index, the Price and Quotation Index (IPC) of the Mexican Stock Exchange (BMV), is on track to end the year around its maximum level of 57 thousand points, with a gain of 18.5 percent in 2023. ,

The Mexican stock index was driven by gains of Grupo Carso shares, which had a return of almost 100 percent, as well as shares of Qualitas, Cemex, Alcee, Cementos Chihuahua, Femsa, which had an average return of 60 percent.

For its part, the Nasdaq has gained more than 44 percent in 2023. If this continues through today, Friday, the last day of trading, it will be the best year for the technology index since 1999. For its part, the S&P 500 is just a few points off. On a historic note, if he achieves another positive week, it would be the longest weekly winning streak since 2004.

In addition to production cuts by the Organization of the Petroleum Exporting Countries, geopolitical events and economic problems following the pandemic mainly lead to WTI crude falling by about 10 percent in 2023, its first loss since 2020. The year is on its way. Brent suffered a loss of 8.75 percent.