The Mexican currency closed at 18.9498 per dollara gain of 0.6% compared to the 19.06 with which it closed on Tuesday, its best level since the end of February 2020, according to central bank data.
“U.S. inflation is released tomorrow and the market is betting that it will continue to slow, which means the Fed won’t have to be as aggressive in raising rates this year,” said Gabriela Siller, director of analysis at Banco Base. .
“The appreciation of the main dollar crosses is related to optimism, since the light is beginning to be seen at the end of the road with high inflation in the United States and the rise in interest rates,” he added.
The probability of a 25 basis point rate hike at the February 1 meeting stands at nearly 80%, up from 40% a month ago, according to CME Group’s FedWatch tool.
The peso has advanced five days in which it accumulates an appreciation of 2.3%, and is among the emerging market currencies with the best performance.
If inflation in the US subsides, the peso could strengthen further; However, if inflation rises, the currency could depreciate to 19.40 per dollar, according to CiBanco analysts.
“In any case, the peso would remain in values of relative strength compared to most of its peers in emerging economies. This strength could be maintained during the month, awaiting the reaction of the Fed in its first monetary policy meeting”, they added.
With information from Reuters.