Mexican peso to be stable in 2023

Against the backdrop of a downturn in the economy, the weakening of the Mexican currency in the coming year is not expected to be significant. According to a Reuters survey among currency strategists, confidence in moderate policy and manageable government debt remains at a high level.

The Mexican peso is currently trading near its highest levels since the beginning of the coronavirus pandemic.

According to the average forecast of 22 strategists surveyed in the first days of December, the peso is expected to be 20.16 to the U.S. dollar at the end of next year. This is 2.2% lower than this week's level. 

Excluding the fall in the first quarter of 2020, the value is within the range of the last five years, that is, close to 18.0-22.0.

The main problems of the Mexican peso in the medium term are the weakening economic environment and how Mexico's central bank (Banxico) is trying to adapt to the Fed's  inflation-fighting strategy.

Analysts' expectations are associated with a slowdown in Mexico's GDP growth to 0.95% in 2023, down from 2.8% this year. This is due to growing concerns about the high probability of a recession scenario in the United States next year.

However, the conservative policy of the central bank and the Mexican government supports financial sentiment in the country, and their prudence has been noted by Fitch Ratings.