Mexican Financial System Strengthens Peso on Solid Macroeconomic Fundamentals

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The Mexican Financial System Shows High Levels of Capital and Liquidity, says Banxico Governor

In a recent statement, Victoria Rodríguez Ceja, the governor of Banxico, emphasized the robustness of the Mexican financial system, pointing out its solid levels of capital and liquidity. She also highlighted that Banxico does not have an exchange rate target and that the strength of the peso is based on strong macroeconomic fundamentals.

Strong Macroeconomic Fundamentals Support the Peso

During the presentation of the Financial Stability Report for the first half of 2023, Rodríguez Ceja mentioned that Mexico’s strong macroeconomic fundamentals contribute to the stability of the exchange rate. These fundamentals include responsible fiscal and monetary policies, a sustainable level of remittances, stable external accounts, and manageable debt-to-GDP levels.

A Market-Based Exchange Rate Regime

Rodríguez Ceja reiterated that Mexico operates under a flexible exchange rate regime determined by the market and available information. Banxico does not set specific exchange rate targets but closely monitors the market’s performance.

Banxico’s Intervention in Extreme Situations

Rodríguez Ceja stressed that the Exchange Commission only intervenes in extreme situations when the exchange rate market encounters operational difficulties. However, she pointed out that Mexico’s exchange market has been operating in an orderly manner, and extreme interventions have not been necessary.

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