Being overweight is also a risk for Mexico

The interbank dollar closed on Friday at 18.3632 pesos, an appreciation of 6% since the beginning of the year and it is expected to continue strengthening in the following days.

Gabriela Siller, director of financial economic analysis at Banco Base, points out that the negative aspects of a super peso mean fewer pesos for each dollar in exports and remittances, and the entry of direct foreign investment is also discouraged.

“We are in a bad balance, for me the level below 18.70 pesos is problematic (…) the balance is 18.79, below that level, it makes us vulnerable to corrections,” said Jessica Roldán, chief economist of Finamex, during an event organized by Bloomberg.

The main reasons for the current behavior of the peso are due to the fact that the Bank of Mexico surprisingly raised the interest rate by 50 points, during its last monetary policy decision.

The central bank said that inflation has shown a slow deceleration after registering a rate of 7.91% in January. Banxico’s decision “disconnected from the Federal Reserve, its counterpart in the United States, which only raised the rate by 25 points.

For economists like Jessica Roldán and Carlos Serrano, chief economist at BBVA Mexico, the 50-point increase has been “unfortunate.”

“A more depreciated exchange rate helps the economy that has been anemic and I think that the exchange rate is explained by external conditions, a fiscal policy that looks good in the photo but more by the rate differential,” Serrano said.