Mexican peso overtakes pound as best-performing currency in 2024, continuing its ‘Super Peso’ streak

(Bloomberg) — The Mexican peso’s rise adds one milestone after another. Driven by high interest rates, low volatility and nearshoring hype, the coin has managed to post eight consecutive sessions of gains, its longest winning streak in over two years, to post a 1% gain this year and It overtook sterling as the best performing currency among the major currencies last week.

Mexican peso today: It trades at 16.70 per dollar as US currency widens losses

And it’s the latest leg of a multi-year rally The peso has appreciated by 26% since the end of 2016Eclipsing the performance of its Latin American counterparts.

The Mexican peso has earned the nickname ‘Super Peso’ after posting a record appreciation of nearly 13% against the US dollar in 2023. This has established it as one of the best performing emerging currencies globally. However, the outlook for 2024 is not so promising for the Mexican currency, especially due to the possibility that the Bank of Mexico will start lowering interest rates this March.

“It will be important to analyze the exchange market reaction to Banxico’s decision of March 21, both in the context of the first cut and in messages about the future trajectory of the monetary policy rate,” an analysis by Citibanmex indicated. Unit.

“We estimate that the exchange rate will reach 18.58 pesos per dollar at the end of 2024,” the institution says.

According to the entity the main factors driving this behavior are the narrowing of the rate differential with the United States, a possible anticipated slowdown in the flow of income from remittances, lack of enthusiasm around the ‘nearshoring’ narrative. In Mexico, and the fact that the real exchange rate enters an overvaluation with respect to its long-term average.

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