The exchange rate of the peso against the dollar reached a minimum of 18.62 pesos on July 28. Since then and throughout recent days, the price has already increased and yesterday it reached 17.35 pesos for a few moments, a increase of almost 70 cents in four days.
This behavior has put on the table the question that heads this article: Has the dollar rebound already started? Will we have a behavior of the dollar that is already moving in a different direction?
My opinion is that it is unlikely that we will see hereinafter a consistent rise in the price of the dollar, since the fundamental factors that led to the appreciation of the peso or the weakening of the dollar have not fundamentally changed.
What we witness these days is volatile behavior of the dollar that derived mainly from a series of reactions to the downgrading of the US public debt by Fitch.
There was no rational reaction to the fact that the rating of US debt securities was lowered, but rather a growth in risk aversion, which almost as if it were a conditioned reflex generates a movement towards dollar assets, such as Treasury Bonds, even though they have been downgraded.
I believe, however, that this circumstance will be temporary.
The fall in the price of the dollar has not been continuous, but has been interrupted by brief periods of increases.
For example, him March 3 was already at 17.95 pesos and then him March, 15th bounced up 18.97 pesosan increase of more than one peso in 12 days.
Another example occurred after May 15. On that date the parity had reached 17.43 and by the 23rd of that month it was almost at 18 pesos.
It may take a few days to return to the levels it was trading a few days ago, but unless there is an unexpected change, I think it will return.
Investors have already discounted that Banco de México will not move its rates of interest when he announces his monetary policy decision next Thursday.
It is not going to join the central banks that in Latin America have already decided to start the path back to lower rates.
The deputy governor’s statements Jonathan Heathalthough it is not the official position of Banxico, they reveal how the Governing Board is being thought of.
Somehow suggested that there would be a restrictive monetary policy for eight quarters from the last of last year. That is, we have 3 and there are five more to go.
Of course it is compatible monetary policy remains restrictive and? rates go down.
I do not rule out this possibility for the monetary policy decisions of November 9 or December 14.
But, the differential between Mexico and the United States and other developed markets continues to be so wide, that even if they fell at the end of the year, there would certainly be conditions for have a relatively cheap dollar, perhaps below 18 pesos towards the end of this year.
When could there be then a change of address in the medium term in the movements of the North American currency?
I think the main ingredient that can influence it is politics.
If it is perceived that the formal electoral process in 2024 will be full of confrontation and uncertainty, So I think the perception of risk is going to be great enough to start seeing a more expensive dollar.
I wish we had a democratic normality and whatever the outcome of the election, the policies would continue.
But I think that we will have stormy months that they are inevitably going to hit parity.
I hope we are wrong.
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