The Mexican peso has once again lost ground against the US dollar, opening at 18.37 pesos on Wednesday, July 24. This represents a decline of 1.23% compared to the previous day’s rate of 18.14 pesos, making it the currency with the largest losses against the dollar this morning.
According to an analysis by financial group Monex, the peso’s decline is attributed to increasing local risk aversion, particularly with the possibility of judicial reforms being approved by Congress on August 1.
On the other hand, the dollar is experiencing a slight decrease this morning. This follows the report that the S&P Global Composite PMI index in the United States rose to 55.0 points in July, up from 54.8 in June. This marks the highest level since April 2022 and indicates a continuous growth in economic activity over the past 18 months.
In the last week, the US dollar has risen by 2.26%, maintaining an annual increase of 7.33%. When compared to recent days, this represents two consecutive sessions of positive numbers. Moreover, the recent volatility over the past week is slightly less than what has been observed over the past year, suggesting fewer abnormal fluctuations during this period.
In a note regarding the market opening, Banco Base explained that consumer inflation in Mexico has reached an annual rate of 5.61%, up from 5.17% in the latter half of June. The organization continues to forecast year-end inflation at 4.4%, with a strong possibility of revising this prediction if further evidence from July suggests significant pressures on the peso.
The Mexican economy is experiencing a series of contrasting trends, which are expected to persist according to forecasts from the Bank of Mexico (Banxico) for 2024. Regarding the exchange rate, the central bank anticipates the dollar to range between 17.68 and 18.67 pesos throughout the year. This outlook is conservative, considering the peso has already exceeded 2023 forecasts, dipping below 17 pesos, which hasn’t been seen in eight years.
Additionally, inflation is expected to continue trending downward since hitting a historic high of 8.7% at the end of 2022. Banxico predicts inflation will settle at 4.02% in 2024, though it may take time to approach the ideal rate of three percent.
This situation contrasts with growth forecasts for the Gross Domestic Product (GDP), where the central bank expects a growth rate of 2.29% in 2024.
The Mexican peso serves as the legal tender in Mexico and was the first currency in the world to adopt the dollar sign ($), which was later used by the United States for the dollar. Currently, the peso is recognized as the fifteenth most traded currency globally and ranks as the most traded currency in Latin America, following only the US and Canadian dollars on the continent.
The peso is abbreviated as MXN, while prior to 1993, it was commonly referred to as MXP. The coins used in Mexico are semi-circular and feature the national emblem on the reverse side. One Mexican peso is equivalent to 100 cents, and the country employs coins of 1, 5, 10, and 20 pesos, as well as bills of 20, 50, 100, 200, 500, and 1,000 pesos.
Image and News Source: https://www.infobae.com/mexico/2024/07/24/mexico-cotizacion-de-apertura-del-dolar-hoy-24-de-julio-de-usd-a-mxn/
