Mexico’s strong economic foundations are key to the recent strengthening of the Mexican Peso against the U.S. dollar, Victoria Rodriguez, Governor of the Bank of Mexico (Banxico), posited on Wednesday.
During the presentation of the “Financial Stability Report”, Rodriguez elaborated on the underpinning factors, which include responsible fiscal and monetary policy measures taken by Mexico.
Remittances to the country, sustainable external accounts, and stable debt levels relative to Gross Domestic Product (GDP) have all played a part.
The strength of the local financial system, marked by substantial capital and liquidity levels, has also been beneficial.
Rodriguez emphasized that these elements collectively bolster the exchange rate levels.
She further reminded that Mexico operates under a flexible exchange rate regime, wherein market forces and available information largely determine the exchange rate.
The Mexican Peso, one of the most liquid currencies in emerging markets, has appreciated in the past few months, attaining exchange rate levels unseen in seven years.
The currency closed Wednesday’s trading session at an interbank rate of 17.12 pesos per U.S. dollar, up from 17.21 units the previous day.
At the beginning of 2023, the Mexican peso was trading at 19.48 pesos per dollar, as per Banxico’s records.