Why is the value of the Mexican Peso rising against the dollar? Is it a good time to exchange pesos for dollars?
According to independent analysts, the current situation has led to the national currency being dubbed “superpeso.”
Today, November 11th, the peso closed below 19 to the dollar, making it the third most-valued currency behind the US dollar and the Japanese yen.
According to the Banco de México (Banxico), the peso ended the day at 18.94 units per dollar, marking the first time since February 2020 that this has occurred.
According to independent analyst Carlos Hermosillo, the current situation has led to the national currency being dubbed “superpeso” due to its performance over the last several months. This performance has made the national currency one of the most attractive investments.
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Experts have speculated that a combination of factors explains why the Mexican peso did not fall victim to the dollar’s rising impulse, unlike other currencies like the Argentine peso.
It's remarkable how the Mexican Peso since 2021 hasn't depreciated against the strongest Dollar we've seen in 20 years.
— dan.mx (@danny_mx) September 22, 2022
In comparison, since the start of 2021 the Euro lost 20% against the Dollar and the Japanese Yen lost 40%.#SuperPeso pic.twitter.com/0Svk1X2hjv
Why is the peso doing so well, according to Bloomberg
- Tight financial policies.
- Because of rising interest rates, which have fueled the carry trade.
- The potential for a dramatic shift in international trade in the following years might lead to an increase in direct foreign investment.
As rising wages and transportation costs erode China’s competitive advantages, more Chinese factories are relocating to Mexico. In addition, companies are “nearshoring” their operations from Asia to locations closer to the United States, the world’s largest market, in response to aversion to remote supply chains caused by COVID.