What impact does this have on Mexico, Cuba, Honduras and other countries in the region?

As the year ends, the US dollar experiences a negative decline, its worst performance since 2020.

According to the data provided, the Dollar Index (DXY) recorded a marginal increase of 0.15%, reaching 101,060 units during the last trading session on Friday, December 29. Investment, This index measures the greenback’s strength against a basket that includes six major currencies around the world.

2023: a challenging year for the dollar

Despite a surge in the final hours of the trading day, the dollar failed to recover from its negative performance during the last month of the year, experiencing a decline of more than 2% compared to the previous year. This is the first year of decline for the coin since 2020, ending a two-year positive streak.

The Fed and its unexpected changes in December

The dollar will reach its highest level in two decades in 2022 due to the US Federal Reserve (Fed)’s tough stance and aggressive interest rate hike. However, in the last half of the current year, the Fed decided to keep rates unchanged, which had a negative impact in December.

The dollar fell on growing expectations that the Fed will begin lowering interest rates in 2024, ending the cycle of hikes. This has distracted the market, which is now focusing on when the cuts will start and how they will impact inflation. A new, not very positive scenario for the US currency.

Fed constraints and their impact on the dollar

According to estimates from CME’s FedWatch tool, as of New Year’s Eve, the probability of the Fed keeping interest rates unchanged in January is 83.5%, while the remaining 16.5% suggest that the Fed could start cutting as soon as January. .

Any decision of the Fed in monetary policy will always directly affect the value of the dollar. On this occasion, the reduction in rates is perceived as a challenge for the greenback, as it reduces the attractiveness of assets denominated in that currency for investors seeking higher returns, according to analysts. Investment,

Dollar prices in Central America at the end of 2023

Following the dollar’s decline, the following US dollar prices appear in Mexico and some Central American countries at the end of 2023:

Exchange Rate:

• Cuba: 120,0000 Cuban pesos (CUP) – 265,0000 Cuban pesos (CUP) in the unofficial foreign exchange market
• Mexico: 16.9725 Mexican Pesos (MXN)
• Costa Rica: 519.59 Costa Rican Colon (CRC)
• Guatemala: 7.8234 quetzals (GTQ)
• Honduras: 24.6756 Lempira (HNL)
• Nicaragua: 36.6027 Cordoba (NIO)

Buys:

• Cuba: 110.40000 Cuban Pesos (CUP) – 262.0000 Cuban Pesos (CUP) in the unofficial foreign exchange market
• Mexico: 16.9600 Mexican Pesos (MXN)
• Costa Rica: 506.95 Costa Rican Colon (CRC)
• Guatemala: 7.6428 quetzals (GTQ)
• Honduras: 24.2242 Lempira (HNL)
• Nicaragua: 36.1512 Cordoba (NIO)

sale:

• Cuba: 123.60000 Cuban pesos (CUP) – 265.0000 Cuban pesos (CUP) in the unofficial foreign exchange market
• Mexico: 16.9850 Mexican Pesos (MXN)
• Costa Rica: 532.23 Costa Rican Colon (CRC)
• Guatemala: 8.0039 quetzals (GTQ)
• Honduras: 25.1271 Lempira (HNL)
• Nicaragua: 37.0541 Cordoba (NIO)

Due to New Year’s celebrations, financial markets will not reopen until Tuesday, January 2, as the first day is considered a holiday at the federal level.