Mexico Exchange Rate November 2020


Mexico: Peso rallies on likely Joe Biden victory in U.S. presidential election

November 9, 2020

The Mexican peso posted strong gains against the U.S. dollar over the past month, particularly rallying during the week of the U.S. presidential election that saw Democratic contender Joe Biden move closer to victory. On 6 November, the peso ended the day at 20.59 per USD, marking a 5.6% appreciation month-on-month. That said, the currency was down 7.0% year-on-year, while it has lost 8.0% of its value year-to-date.

Emerging-market currencies in general benefited from strengthening expectations that Joe Biden would eke out a victory in the U.S presidential race as well as from the prospect of Republicans retaining control of the Senate, thus pointing to largely static U.S. fiscal policy ahead. This would force the Federal Reserve to keep rates low for longer, boosting interest for higher-yield markets in turn. In addition, the likely Biden presidency supported the Mexican currency, which has been pressured by the Trump administration’s hard line stance on trade, on expectations of a less adversarial trade policy going forward.

Despite these gains, the peso is still markedly down from February’s pre-pandemic levels. And although it may strengthen further following the final election results, gains could prove to be short-lived as the economy’s recovery from the Covid-19 blow is showing signs of losing momentum, despite the solid quarterly rebound in GDP in Q3. Moreover, given its highly liquid and traded nature, the MXN remains vulnerable to sharp swings in market sentiment.

Our panel sees the MXN ending 2021 at 21.93 per USD and 2022 at 21.36 per USD.

Author:, Economist

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Mexico Exchange Rate Chart

Mexico Exchange Rate November 20 20

Note: Mexican peso against the United States Dollar.
Source: Refinitiv.

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