As was the case 12 months ago, economists are once again suggesting that Mexico’s currency will lose ground during the coming year.
Most “expert” predictions that the peso would end 2023 at around 20.50 to the dollar were well wide of the mark. On Thursday, December 28, the peso stood proudly at 16.94 to the dollar, having been at 19.50 on January 2 of this year.
Analysts say presidential elections both north and south of the border this year will boost volatility, as will a potential slowdown in the U.S. economy that will have a knock-on effect in Latin America. The specter of Donald Trump victory in the 2024 U.S. election might also destabilize the currency markets. A similar adjustment to the peso occurred prior to his win in 2016 when the peso depreciated 24.79 percent between January until the week of the election in November.
General elections in Mexico make markets jittery and can also drive the peso/dollar exchange rate. In the last five contests (1994, 2000, 2006, 2012, and 2018), the dollar has risen by 3.50 percent in the six months before voting day. In the month before each of these five June elections, the peso depreciated by an average of 4.45 percent.