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Mexican peso highs and lows made it best performing currency in Latin America in 2017

Mexico City, Mexico  — The Mexican currency closed 2017 with a gain of 5.15 percent in a year that was considered a roller coaster by political, commercial, monetary and fiscal events, mainly from the US.

After four consecutive years on the down slide where the Mexican peso depreciated 60 percent against the dollar, the peso finally made a comeback with an appreciation of 5.15 percent with respect to the US currency during 2017.

The Mexican currency experienced a number of highs and lows when the first quarter turned out to be one of the best that the peso historically had, gaining 9.44 percent, while the last quarter of the year was a low with a decrease of 7.69 percent.

Fear among investors of the commercial, fiscal and even migratory policies of Donald Trump, which had Mexico as a constant objective, was the main factor that affected the Mexican currency.

The effect of the monetary policy implemented by the Federal Reserve (Fed), which continued with its normalization process and, with it, reconfigured capital flows in the exchange market, was also added.

“During 2017, the movements of the exchange rate were determined by a series of factors among which are highlighted by their relevance to the economic future of Mexico political events, the evolution of monetary policy of Mexico against the monetary policy of the United States and the process of renegotiating NAFTA, which became key since the beginning of 2017 but became even more important during the second half of the year with the beginning of the formal process of renegotiation of the commercial treaty,” explained Gabriela Siller, director of Banco Base Analysis.

After all that volatility, the spot dollar closed the year at 19.6595 units, according to data from the Bank of Mexico (Banxico). Meanwhile, in the banking window, the dollar stood at 19.90 units, according to Citibanamex.

On January 1, in the interbank market spot dollar rose to 19.6683 until 17:30 hours Mexico time.

In the middle of the highs and lows over the last year, the most outstanding movements for the exchange rate were, first, the 20 percent advance that the peso had against the dollar since Trump took office. The second relevant movement occurred in the last five months of the year, when it came to lose 13.7 percent between the maximum and the minimum reported in that period.

During 2017, the Mexican peso ranked second as the best performing currency among Latin American nations.