Published 20.06.2023 16:07
By: Julio Sanchez Onofre
Investing.com – The Mexican peso continued its downward trend this week as the US dollar strengthened, pushing the exchange rate above 17.20 pesos.
At the close of Tuesday’s session, the exchange rate reached 17.21 pesos per dollar, marking a week-high and a depreciation of the national currency by approximately 0.78%.
It’s worth noting that the dollar reached a peak of 17.24 pesos during the day.
“The peso’s depreciation is attributed to a 0.14% strengthening of the US dollar, as indicated by the weighted index,” explained Gabriela Siller Pagaza, Director of Economic and Financial Analysis at Banco Base.
According to the analyst, three factors contributed to the recent rebound in the exchange rate, which last week brought the Mexican peso to its lowest levels in nearly eight years:
- The expectation of a 25 basis points interest rate hike by the Federal Reserve following the release of robust housing data in the United States.
- The anticipation of the Federal Reserve Chairman’s testimony before the United States Congress on June 21 and 22. During the previous monetary policy meeting on June 14, the Fed revised its interest rate forecast for 2023 from 5.1% to 5.6%.
- Increased risk aversion in financial markets, driven by concerns over China’s economic growth stagnation.
“It’s important to note that the Mexican peso was not the only currency to depreciate during the session. The most affected currencies in the major currency basket today were the Chilean peso with a 1.06% depreciation, the South African rand with 1.00%, the Australian dollar with 0.96%, the Russian ruble with 0.85%, the Mexican peso with 0.78%, and the Norwegian krone with 0.59%,” he added.
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