Mexico | ¿What explains MXN stability?

Summary

Historical evidence shows that when the United States Federal Reserve (the Fed) implements cycles of increases in monetary policy rates, the dollar appreciates against most world currencies.

Key points

• Key points:
• In previous episodes, the peso was among those currencies that depreciated against the dollar.
• We are now facing another cycle of Fed hikes. In fact, it is the steepest cycle in the last four decades.
• The expectation is that for the first quarter of next year this rate will be at levels close to 5%.
• This is a higher increase than the cycle of increases observed between 1994 and 1995, which was one of the factors that triggered the terrible macro-financial crisis in our country.

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