04/05/2024
Will The Strong Peso Continue?
For those interested in the USD/MXN peso currency chart or the CAD/MXN chart, we are at an interesting inflection point.
The Peso has been strong for the last 2 years, dropping from 25.78 peso for 1 USD at the hight of the Cerveza Bug to a recent low of 16.26. It is now consolidating around 17 and I had identified this area as a point of interest in the past, and on the chart below. I do believe it will trade in this range between low 16s to high 17s for some time and go sideways until a major catalyst breaks it out of this range over the next year.
The elections will have an impact on the currency going forwards, first with the coming Mexican Election and then the US elections this coming Nov. We discuss the peso currency extensively in a group that focuses on investing and entrepreneurship in Mexico.
Also, another hot topic that has been extensively discussed in the group is earning interest of 10-11% in various banks in Mexico, and one opportunity even pays 14%. At best, in the US and Canada one can get about 5% for a fixed term, so there is great interest rate spread to be earned. I also shared info in that group about a financial institution in Mexico that even non-residents can open an account and earn 11%.
The question you have to ask yourself is... is now a good time to sell pesos and buy USD if the dollar strengthen next year with a Trump victory, or buy Pesos now and earn 11% and hope the Peso continues to strengthen as it has in the last 2 years.
What would you do now... buy Peso and invest at 11%, or keep USD and hope to goes back up to 19-20 pesos? This is an ongoing discussion we have in our group and I share my thoughts there extensively.
