The Mexican peso regained momentum to finish with a weekly appreciation of 1.67% units per dollar, its best close since July 28, when it was up 1.92% after minutes from the Bank of Mexico (Banxico) confirmed that interest rates could remain high for longer than expected.
This surge in the currency also came in a week when investor attention was focused on the Jackson Hole speech by Jerome Powell, the United States Federal Reserve (Fed) President, who said on Friday that he was considering it If necessary, the interest rate will continue to increase.
On Friday, the exchange rate closed at 16.7543 pesos per dollar, up 0.41%, or 6.91 cents.
With this rise, the peso went on a streak of four sessions below 17 units per dollar, up 1.49% cumulatively over the period. So far in 2023, it has recorded a gain of 2.76 pesos per dollar, or 14.12 percent.
“Locally, investors have adopted the hawkish tone of Banxico’s protocol and have had a positive impact on the Mexican peso as expectations of rate cuts have faded this year,” said Alejandro Padilla, deputy general manager for economic and financial analysis at Banorte.
He added that “forex market dynamics will follow the course of tightening monetary policies by central banks in developed countries.”
The above comes as the dollar also strengthened after the Fed President’s speech, posting gains for a month and a half, as reflected in the DXY index, which ended up 0.68% weekly and at 104.08 units.
