In the first half of the year, the Mexican peso showed an appreciation of 1.93% or 39.7 cents, trading around 20.1325 pesos per dollar., with the exchange rate reaching a high of 21.4676 pesos on March 8 and a low of 19.4136 pesos on May 30. During the semester, the exchange rate showed a volatility of 10.36%, against 9.55% in the immediately preceding semester.

In the large basket of the main crosses, only four currencies showed an appreciation against the dollar in the first half of the year, the Russian ruble with 27.60%, the Brazilian real with 6.18%, the Peruvian sol with 4.34% and the peso Mexican with 1.93%. %. The appreciation of the Russian ruble is due to the implementation of capital controls after the start of the war in Ukraine at the end of February.

The Brazilian real and the Peruvian sol appreciated with a strengthening in the first half of the year of commodity prices, which favored the exports of commodity-producing countries. Among the least depreciated currencies, the Hong Kong dollar stands out with 0.65%, the Canadian dollar with 1.88%, the Colombian peso with 2.13% and the South African rand with 2.20%, which are mostly currencies of commodity-producing countries.

The Mexican peso appreciated in the first half due to three factors:

1. Being the second most liquid emerging economies currency in the world and also operating 24 hours a day, the peso is used to speculate on the performance of other currencies in emerging and Latin American economies. Due to the above, the Mexican peso has appreciated with other currencies of commodity-producing countries, despite the fact that Mexican exports are mainly manufactured goods.
2. During the first semester, it has benefited from growth in exports and remittances. According to the original series, in the first five months of the year, exports show a growth of 18.47% compared to the same period in 2021, growth of 82.58% due to non-oil exports. Remittances also continue to grow.

With data from April, the flow of remittances over the past 12 months stood at $54,162.04 million, a new all-time high and accumulating 24 consecutive months of growth.

3. The Bank of Mexico raised the interest rate gradually towards a tight monetary stance, racking up a 225 basis point increase to 7.75%. Because inflation has been persistentin the June 23 monetary policy announcement, the Governing Council raised the rate by 75 basis points, the largest increase in a single announcement since 2008, when the interest rate was set as an operating target monetary policy.

The Governing Council has also adapted its language and sent the signal that it will continue to raise its interest rate in the coming months.so the interest rate towards the end of the year may be close to 10 percent.

During the second quarter, the peso depreciated by 1.32% or 26.3 cents, with the exchange rate reaching a low of 19.4136 on May 30 and a high of 20.7014 pesos per dollar on May 16. June.

The depreciation of the peso in the third quarter was concentrated in June, at 2.42% or 47.5 cents. The peso’s depreciation in June was the result of the US dollar strengthening by 2.68% during the period, after the Federal Reserve sent a signal that it will adopt tight monetary policy at a faster pace. . On June 15, the Fed raised its interest rate by 75 basis points to a range between 1.50 and 1.75 percent, the most aggressive hike since November 1994.

Similarly, Fed Chairman Jerome Powell reaffirmed the priority of controlling inflation and returning to the 2% target.despite the fact that it could cause a slowdown in economic activity, and even acknowledged the risk that tight monetary policy could lead to a recession in the United States.

During the third quarter, it is likely that the exchange rate will continue to respect minimum levels between 19.40 and 19.60 pesos per dollar.because there are still factors that cause episodes of risk aversion in global financial markets, mainly signs of a global economic slowdown and the risk of an economic recession in the United States, so that an appreciation in below these levels is unlikely.

On the other hand, the exchange rate could show upward pressure towards levels of 20.80 and 21.40 pesos per dollar, in case the FED adopts more aggressive language than it has. so far or an increase in risk aversion.

A key risk will be the release of US economic growth for the second quarter which will be released on July 28., where there is a possibility of a quarterly contraction for the second consecutive quarter. Although two consecutive quarterly declines in GDP are not the official definition of a recession, if this event were to occur, markets could interpret it as such.