The Euro has shown signs of recovery after a week of losses in the currency exchange market.
The euro closed trading at an average of 21.07 Mexican pesos, marking a 1% increase compared to the previous day’s rate of 20.86 pesos.
Analyzing the past week’s performance, the euro has experienced a slight decrease of 0.07%. However, when looking at the past year, the currency still maintains a significant increase of 14.61% against the Mexican Peso.
In terms of daily fluctuations, the euro’s performance reversed from the previous session, which saw a 0.32% decrease. This recent behavior indicates a lack of consistent trend in its value. The volatility over the last few days has been lower than the annual volatility, suggesting less fluctuation than typically expected over a longer period.
In Mexico, Jonathan Heath, deputy governor of the central bank, indicated that the Governing Board is expected to discuss reducing the interest rate by 25 or 50 basis points (bp) at the first monetary policy meeting of 2025. He also mentioned that larger adjustments could be considered depending on the progress of disinflation.
According to economist Jorge Gordillo Arias’s analysis, it is probable that Banco de México (Banxico) might decide to decrease the benchmark interest rate by more than 25bp at some point in 2025. This is based on analysts’ consensus forecast that the overnight interbank interest rate could reach 8.5% by the end of the following year.
The Mexican “Superpeso” and its Strength Against the Euro
The Mexican peso has not only performed well against the US dollar but has also demonstrated strength when compared to the euro over the last year.
The Mexican currency, standing out as one of the few globally that has not depreciated against the dollar despite worldwide economic challenges like inflation, has recorded its best figures since its strong performance in 2016.
Colloquially known as the “superpeso”, the strength of the Mexican currency is largely attributed to Banco de México’s (Banxico) decisions regarding reference interest rates, which have simultaneously increased its attractiveness to investors.
With the financial stability achieved in public finances and consistent remittances in 2023, the Mexican government estimates that it could surpass the 2022 record in remittances, which reached $58.487 billion US dollars.
In contrast, the euro has been nearing parity with the dollar and has even been worth less than a dollar at times. This situation, unseen in two decades, is partly due to global inflation and significantly influenced by Russia’s invasion of Ukraine, which caused a drop in commodity prices and economic instability in Europe.
Understanding the Mexican Peso
The Mexican peso is the official currency of Mexico and holds historical significance as the first currency in the world to use the $ sign, later adopted by the United States for the dollar.
The Mexican peso is the fifteenth most traded currency worldwide, and the most traded in Latin America. In the Americas, it ranks third in trading volume, only behind the US dollar and the Canadian dollar.
Currently, the abbreviation MXN is used to refer to the Mexican peso, but prior to 1993, the currency code was MXP.
Commonly used Mexican coins are semicircular and feature the national emblem on the reverse. One Mexican peso is equivalent to 100 centavos. Coins are available in denominations of 1, 5, 10, and 20 pesos, while banknotes come in denominations of 20, 50, 100, 200, 500, and 1,000 pesos.
