As the year comes to a close, the US dollar closes in the red, marking its worst performance since 2020.
During the latest trading session on Friday, December 29, the dollar index (DXY) recorded a slight increase of 0.15%, reaching 101,060 units, according to data provided by Invest. This index measures the strength of the greenback against a basket of the world’s six major currencies.
2023: A challenging year for the dollar
Despite a rebound in the final hours of the trading day, the dollar failed to recover from the negative performance of the final month of the year, recording a decline of more than 2% compared to the previous year. This marks the first year of decline for the coin since 2020, ending a two-year hot streak.
The Fed and its unexpected change in December
2022 saw the dollar reach its highest in two decades, driven by the aggressive stance of the US Federal Reserve (Fed) and its aggressive interest rate hikes. However, in the last half of the current year, the Fed decided to keep rates unchanged, which had negative repercussions in December.
The dollar has depreciated due to growing expectations that the Fed will end the interest rate hike cycle and start reducing them in 2024. This has diverted the market’s attention, which is now focused on when the cuts will begin and on how they will influence inflation, marking a new not very positive scenario for the American currency.
Fed odds and their impact on the dollar
On New Year’s Eve, the odds of the Fed keeping interest rates unchanged in January are 83.5%, while the remaining 16.5% suggests the Fed could begin cuts as early as January, according to projections from the CME FedWatch tool.
Any Fed decision regarding monetary policy will always directly affect the value of the dollar. On this occasion, falling rates are perceived as a challenge for the greenback, as it reduces the attractiveness of assets denominated in that currency for investors seeking higher yields, according to analysts at Invest.
Prices in dollars at the end of 2023 in Central America
After the fall of the dollar, the end of 2023 shows the following US dollar prices in Mexico and some Central American countries:
Exchange rate:
- Cuba: 120,0000 Cuban pesos (CUP) – 265,0000 Cuban pesos (CUP) in the informal foreign exchange market
- Mexico: 16.9725 Mexican pesos (MXN)
- Costa Rica: 519.59 Costa Rican colons (CRC)
- Guatemala: 7.8234 quetzales (GTQ)
- Honduras: 24.6756 lempiras (HNL)
- Nicaragua: 36.6027 Cordoba (NIO)
Acquire:
- Cuba: 110.40000 Cuban pesos (CUP) – 262.0000 Cuban pesos (CUP) in the informal foreign exchange market
- Mexico: 16.9600 Mexican pesos (MXN)
- Costa Rica: 506.95 Costa Rican colons (CRC)
- Guatemala: 7.6428 quetzales (GTQ)
- Honduras: 24.2242 lempiras (HNL)
- Nicaragua: 36.1512 Cordoba (NIO)
Sale:
- Cuba: 123.60000 Cuban pesos (CUP) – 265.0000 Cuban pesos (CUP) in the informal foreign exchange market
- Mexico: 16.9850 Mexican pesos (MXN)
- Costa Rica: 532.23 Costa Rican colons (CRC)
- Guatemala: 8.0039 quetzales (GTQ)
- Honduras: 25.1271 lempiras (HNL)
- Nicaragua: 37.0541 Cordoba (NIO)
Due to the celebration of the New Year, financial markets will not reopen until Tuesday, January 2, as the first is considered a federal holiday.
2023-12-31 20:11:15
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