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The Mexican Peso Remains Steady.

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The Exchange Commission decides to eliminate a currency exchange coverage program.


Today, every dollar is being sold at 17.12 Mexican pesos, indicating a potential halt to the rapid decline of the dollar due to a significant change in international exchange systems. The Mexican peso has strengthened over a year, transitioning from $21 per dollar to $16.70 per dollar a month ago, positioning it as the most appreciated currency worldwide throughout this year.

Following this successful path of the Mexican currency, the Exchange Commission has made a decision that will impact the strengthening of the Peso. The change, which was recorded at the end of August, involved the Exchange Commission - composed of the Ministry of Finance and Public Credit, as well as the Bank of Mexico - deciding to eliminate a currency coverage program that had been in place since 2017. These coverages acted as a form of insurance for commercial banks that bought the dollar at a specific price directly from the Bank of Mexico, regardless of the daily volatility of the Mexican Peso.

These coverages increased significantly after Donald Trump assumed the Presidency of the United States and the Peso suffered a severe devaluation. They escalated further during the pandemic when the Peso reacted drastically due to the significant drop in oil prices at the beginning of the global quarantine.

However, once stability was restored, with a massive influx of dollars through remittances and nearshoring, where companies transfer part of their production to third parties in other countries, but in nearby locations with similar time zones, these currency coverages ceased to be justified and it was decided to reduce them.

As a result, now that the coverages have ended and commercial banks have once again begun to assume all the risk for currency volatility, they have started raising the dollar to protect themselves. Although a substantial decrease in the price of the dollar is not expected, there will likely be a balance between the two currencies, not surpassing $20 but not dropping below a certain threshold.