Puerto Vallarta, Mexico – The Mexican peso has been trading above 20 units against the U.S. dollar for the second consecutive day, as both internal and external factors drive market fluctuations. On Friday, the peso reached 20.09 pesos per dollar on the wholesale market, following Thursday’s closing rate of 19.93 pesos per dollar. The depreciation has raised concerns as the peso has steadily weakened since early June, following the presidential elections.
The elections saw the victory of Claudia Sheinbaum, the ruling party’s candidate, who is set to become the first female president in Mexico’s history on October 1. At the time of her win, the peso was trading at 16.95 units per dollar. The significant depreciation since then has highlighted the growing concerns within the financial markets over both political and economic uncertainty.
External Factors at Play: U.S. Employment and Recession Concerns
External economic pressures, notably fears of a possible recession in the United States and shifts in employment data, have compounded the peso’s recent downturn. Gabriela Siller, director of Economic and Financial Analysis at Banco Base, noted that the peso’s depreciation was closely tied to these external factors and the current weakness of the dollar.
As of Friday’s trading session, the peso opened at 19.97 units per greenback, reflecting a modest appreciation of 0.26% compared to the previous day. Despite this slight gain, the Mexican currency remains the most depreciated against the dollar compared to other global currencies, a trend observed throughout the year.
Impact of Domestic Political Uncertainty
Another significant factor in the peso’s fluctuation is the controversial judicial reform promoted by President Andrés Manuel López Obrador (AMLO). The reform has sparked debate and uncertainty, further influencing market sentiment. Political transitions, including Sheinbaum’s upcoming presidency, have also contributed to volatility in the financial markets.
While AMLO’s administration has overseen significant economic policies during his tenure, Sheinbaum’s leadership will mark a new chapter for Mexico, which could lead to further uncertainty in the peso’s future value. Investors and analysts are closely monitoring how the new administration will handle key financial policies, trade relations, and international agreements.
Peso’s Performance in Banks and Exchange Offices
In banks and exchange offices, the peso has shown notable fluctuations. The currency traded as high as 21.05 pesos per dollar and as low as 20.05 pesos per dollar. The Bank of Mexico (Banxico) has officially set the exchange rate at 20 units per dollar to settle the Mexican government’s obligations in foreign currency, as per the Official Gazette of the Federation (DOF).
Projections for the Peso
Looking ahead, private analysts’ consensus, gathered in the Citibanamex Expectations Survey, provides insight into the peso’s potential performance through the end of 2024 and into 2025. The survey, which includes input from 26 major banks and brokerage firms, estimates that the peso could close 2024 at 19.50 units per dollar, with a slight depreciation projected for 2025, placing the peso at 19.85 units per dollar.
The sustained depreciation of the peso is a point of concern for the Mexican economy, particularly in light of global economic uncertainties and domestic political transitions. The continued monitoring of international markets, especially developments in the United States, and the policies implemented by Sheinbaum’s incoming government will play critical roles in determining the peso’s trajectory in the coming months.
Puerto Vallarta, Mexico - The Mexican peso has been trading above 20 units against the U.S. dollar for the second consecutive day, as both internal and external factors drive market fluctuations. On Friday, the peso reached 20.09 pesos per dollar on the wholesale market, following Thursday’s closing rate of 19.93 pesos per dollar. The depreciation has raised concerns as the peso has steadily weakened since early June, following the presidential elections.
