According to Bloomberg, the Mexican peso has become a real leader among the world currencies in 2024. At first glance, this is a modest participant in the currency market. However, it suddenly took first place, bypassing all the expected favorites in the rating of effective exchange rates.
The peso soared by as much as 15% against the US dollar in 2023 and, without slowing down, added another 1.8% this year. Now, one US dollar costs 16.69 pesos, which, by the way, is almost a record since 2015.
Despite the optimistic forecasts, some suppose that the peso is overvalued. Analysts at Deutsche Bank and Bank of America do not see any rosy future for the currency. Nevertheless, the Mexican peso continues to follow the trend.
The situation could be explained by the currency’s low volatility and fabulously high interest rates. Against this backdrop, borrowing in one currency and lending in pesos is an incredibly lucrative strategy known as a carry trade. This is how the Mexican peso supports the global economy.
What is more, Donald Trump's possible return to power in the United States, which earlier could have shaken the peso's position, now may boost it. The fact is that the government is actively discussing a more severe trade war with China, which suggests more investment in neighboring Mexico.
Despite criticisms, the Mexican peso continues to conquer economic peaks, remaining a favorite of investors.
