The strength of the Mexican peso could be maintained against the dollar even in 2024because drastic changes in Federal Reserve policy are not foreseen.
Although there are doubts that Mexico’s peso will be able to maintain the profits recorded in the last weekswill also not face a significant devaluation, according to a report by The Wall Street Journal.
“Few analysts expect the peso to stay at its current level for long, as the Central Bank is expected to start cutting interest rates towards the end of the year,” the report says. “But the forecasts for the end of the year and 2024 still point to a strong peso“.
The report cites that in June, the Bank of Mexico conducted a survey among economists on the maximum projection of the peso to end December 2023, the result is that a dollar could trade at $18.33 pesos.
This projection is far from the $21.33 pesos that were considered.
The peso has had a significant rise in the last year and, particularly, in the last two weeks, reaching $16.75 pesos for each dollar.
The reasons have been various, but the investment projects of the Government of Andres Manuel Lopez Obrador have been fundamental.
The relocation of companies has also helped, in order to avoid a new crisis due to a break in supply chains, as occurred due to the COVID-19 pandemic.
The advance of the peso against the dollar has had some negative consequencessuch as encouraging tourist reservations and real estate purchase plans.
In addition, immigrants must send more remittances, in order to shore up the purchasing power of their families in Mexico, increasing remittances to $60 billion dollars.
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Source: La Opinion