By The opinion
29 Jul 2024, 17:39 PM EDT
The price of the dollar in Mexico registered a significant increase after President Joe Biden declined his re-election intentions, increasing investor confidence in the United States.
Since the announcement by the Democratic president, the dollar in Mexico, the main trading partner of the United States, has risen and is currently at $18.63 pesos.
The increase was added to rises recorded since June 2, when Claudia Sheinbaum was elected as the next president of Mexico and, although it regained ground, the peso has not managed to advance to its pre-election lows.
The peso may also be affected by Elon Musk’s recent announcementwho said he would wait for the results of the US election before making a decision on Tesla’s planned mega-factory in Monterrey, Mexico.
Although President-elect Sheinbaum generates confidence among investors, recent reports on the economy in Mexico also impact the price of the dollar.
Mexico’s latest inflation report was mixed, with core prices slowing toward the Bank of Mexico’s (Banxico) target of 3%, while headline inflation hovered above the 5% threshold.
As in the United States, there is strong criticism of businessmen, who are accused of keeping their profits at a maximum, instead of helping to reduce prices and benefit consumers more.
In the coming days, there could be greater impacts on the peso in Mexico, also due to international transactions, since “operators are liquidating high-yield positions” and that includes the Mexican peso.
“Markets appear to be liquidating positions in some select high-yielding currencies such as the MXN [peso] while the financing yen continues to perform very well,” FXStreet.com reported.
Banxico seems to have a clear understanding of the expectations of the international market, since its projections survey considered that in June the dollar would reach $18.73 pesos.
Even by 2025, the dollar is expected to increase to $19.36 pesos.
The Mexican peso has not been the only currency affected by the dollar, there have also been increases against the euro, the Argentine and Colombian pesos, among other currencies.