The US dollar closes 2023 with its worst performance since 2020. During the last trading session of the year, the dollar index increased by 0.15%, reaching 101,060 units. This index measures the strength of the dollar against a basket including the six main currencies worldwide.
In 2023, the dollar experienced a challenging year, with a decrease of over 2% compared to the previous year, marking the end of a two-year positive streak and the first year of decline since 2020.
The Federal Reserve’s decision to keep interest rates unchanged in the last half of 2023 had negative repercussions, leading to a depreciation of the dollar. Speculation about the Fed ending its upward cycle of interest rates and potentially reducing them in 2024 has diverted the market’s attention, creating a new not-so-positive scenario for the US currency.
As the year comes to an end, the odds that the Fed will keep interest rates unchanged in January stand at 83.5%, while 16.5% suggest the Fed could begin cuts as soon as January, according to projections from CME’s FedWatch tool. Any decision by the Fed in monetary policy will directly affect the value of the dollar.
The decrease in rates is perceived as a challenge for the greenback, reducing the attractiveness of assets denominated in the currency for investors seeking higher returns, according to analysts from Investing.
The end of 2023 shows the following prices of the US dollar in Mexico and some Central American countries:
Exchange rate:
Cuba: 120.0000 Cuban pesos (CUP) – 265.0000 Cuban pesos (CUP) in the Informal Foreign Exchange Market
Mexico: 16.9725 Mexican pesos (MXN)
Costa Rica: 519.59 Costa Rican colón (CRC)
Guatemala: 7.8234 quetzales (GTQ)
Honduras: 24.6756 lempiras ( HNL)
Nicaragua: 36.6027 córdobas (NIO)
Due to the celebration of the New Year, financial markets will not reopen until Tuesday, January 2, as the first is considered a federal holiday.