The Mexican peso has gained ground on the USD this year, but will its strong performance continue? Several factors may influence MXN’s performance. These include the state of global economic affairs, the country’s monetary policy and internal political scenarios.
One factor behind the MXN’s strength is Mexico’s current fiscal austerity. The President Andres Manuel Lopez Obrador’s administration has focused on keeping public debt below 50% of GDP. The decision to resist the pressure to increase government spending has helped keep inflation low. This has boosted investors’ confidence in the country and kept rating agencies at bay.
According to experts, another factor driving the MXN is the country’s central bank’s monetary management. As capital markets remain cautious over the risk of a global recession, Mexico’s central bank Banxico has maintained a tight monetary policy. Banxico has raised interest rates 11 times this year, and a dollar can now buy almost 20 Mexican pesos. This hawkish action, orchestrated by the new head of Banxico, Victoria Rodriguez Ceja, has helped to boost the MXN and contain inflation.
Another factor is the growing number of multinationals investing in the country. Many large corporations, including Apple, Amazon and Google, have consolidated their operations in What’s the reason behind the Mexican peso’s strength?. The influx of foreign investment is helping to improve the economy and is boosting employment. This in turn is reducing the amount of money citizens need to spend on consumer goods. The higher incomes are also benefiting the MXN, as the currency is worth more than it was a year ago.
In the medium term, the MXN will be influenced by domestic economic performances and a possible US recession. According to a report published by CME Group, if the US recessions predicted for 2023 and beyond occur, they could push the MXN lower on fears of increased capital outflows. If on the other hand, the US economy performs better than expected, this could lead to the MXN strengthening against the USD.
Regardless of what happens in the near future, it is important for traders to research the best place to exchange their USD for MXN. Whether they prefer to use an over-the-counter service or an online challenger bank, the right choice can save them significant amounts of money. The use of a MXN to USD calculator can help them find the best deal. This way, they can avoid paying unnecessary high fees when buying and selling MXN. This is especially important in light of the fact that MXN has a very high liquidity in the global financial markets and is traded 24 hours a day, five days a week. This makes it a prime choice for speculators and investors who want to take advantage of its strengths.