(Bloomberg) — Mexico’s peso strengthened and breached a key barrier, a move that helps Latin America’s most-traded currency extend its gain from last year.
The peso has been below 19 per dollar, something that has not happened since February 2020. Traders are now waiting to see if the currency will manage to exceed 18.5237 per dollar, the point it reached in February 2020, just before the covid shock shut down cities and rocked markets.
Mexico’s combination of aggressive interest rate hikes and a relatively quiet market made the peso a darling among currency investors last year, with strength extending into 2023.
The peso rose 5.3% in 2022, making it the second best performing currency among the top 16 tracked by Bloomberg.
The Bank of Mexico has been able to continue raising interest rates at the same pace as its US counterpart, so “this aggressive stance on monetary policy has supported the peso and provided the currency with an attractive yield,” according to Brendan McKenna. , an emerging markets economist and currency strategist at Wells Fargo based in New York.
As an additional factor, he also pointed to the relative stability of Mexican politics compared to some of its Latin American peers.
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Original Note: Mexican Peso Surges Past 19 Per Dollar for First Time Since 2020
—With the collaboration of Sydney Maki and Maria Elena Vizcaíno.
(Corrects exchange rate in title)
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