He exchange rate When it is free floating, that is, subject to the ups and downs of the market It is difficult to predict exactly; however, Banxico conducts a monthly survey of specialists in economy from the private sector, which it publishes on its internet portal.
The homogeneity of the figures projected by the more than 30 specialists in economy leads us to wonder what they are seeing that non-experts don’t. Even in the latter, the feeling of fear for a future devaluation is a current topic of conversation.
What we non-experts see is the performance of the weight in the times we live in. Especially the Generation X. After 22 years of fixed parity at 12.50 ps/dollar In 1976 it was decided to float the weightwhich devalued our currency to 19.95 ps/dollar at the end of that year. From then on, the devaluation processes that have characterized the Mexican economy were accentuated by their consequences: fall in the purchasing power of the peso, capital flight and recurrent crises at the end of six-year terms.
What experts are probably looking at is the relationship between the current exchange rate and the equilibrium exchange rate at the end of 1976. We will understand the equilibrium exchange rate as the one for which both the exchange market and the nation’s balance of payments are in equilibrium. Thus, the equilibrium exchange rate with respect to 1977 is today 17.89 ps/dollar, a parity that is around the 17.50 ps/dollar projected as the minimum in the table above.
The maximum exchange rate reflects the possible deterioration of the Mexican outlook due to a greater risk aversion generated by the approval of the reform of the Judicial Branch, the weakening of autonomous bodies, the uncertainty surrounding the presidential elections in the USA and everything that affects the balance of payments and the stability of the country.
Dear reader,
The parity of our currency against the dollar fluctuates between the 1977 equilibrium exchange rate and the consequences of the potential political-economic deterioration that is coming because the exchange rate wants to retain power.
Grab your life.
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