The peso closed January with a depreciation of 1.41% or 23.9 cents, trading around 17.21 pesos per dollar. (Getty) (FJZEA via Getty Images)
In United States interest rates will remain high at least until mid-March and possibly the entire first half of the year, according to yesterday’s statements by the president of the Federal Reserve, Jerome Powell. His restrictive tone generated a strengthening of dollar which rose almost 2% after the official spoke, its largest monthly increase since September.
Although Powell did not fully assure that rates will remain the same until June, he clarified that they still need more confidence about controlling inflation and their path to the Fed’s goal of 2%.
“The general strengthening of the US dollar “It is due to the expectation that the Fed may be more patient in beginning to cut the interest rate.” indicates an analysis by Gabriella Siller, director of Banco Base in Mexico.
The outlook was that the rate cut could begin in March, and that Powell would give signals about that possibility, which would have weakened the dollar and strengthened the Mexican peso. But for now, with a strong US economy and still doubts about price action, rates will remain at current highs (the range was maintained at 5.25-5.50%).
After the statements of the president of the FED, The peso closed January with a depreciation of 1.41% or 23.9 cents, trading around 17.21 pesos per dollar. What would be the first monthly depreciation of the peso since October, when it lost 3.68%.
“The upward pressures on the exchange rate in Mexico were caused because the monetary policy committee and its president Jerome Powell “They cooled the expectations of the market that expected a first cut in March,” points out an analysis by Jorge Gordillo, director of CiBanco in Mexico.
It is possible that the strengthening of the dollar will continue to impact the peso, at least until expectations that the Fed will cut rates, weakening the US currency, rise again.
In fact, the Survey on the Expectations of Private Sector Economic Specialists, published this Thursday by the Bank of Mexico (Banxico), indicates that the consensus of analysts estimates a depreciation of the peso, with a perspective that would take the price to 18.50 pesos per dollar. Even so, it would be far from the 24 pesos per dollar that the exchange rate reached in 2020.
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