‘Superpeso’ and its effect on the economy: What are the pros and cons of appreciation? 

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One of the advantages of the strength of the peso at the moment is that you can pay the debts that you have in dollars. 

The appreciation of the Mexican peso against the dollar has its pros and cons, and one of the advantages that is manifested in the pocket of consumers is less pressure on inflation, say specialists in the field. 

So far this year, the peso has gained ground against the greenback and has hit lows at the end of 2015, according to the Bank of Mexico (Banxico). 

“The appreciation of the peso has helped curb inflation, since the price of imported merchandise does not rise,” said the director of economic analysis at Banco Base, Gabriela Siller. 

In this sense, until the first half of June, inflation stood at 5.18 percent per year, its lowest level since the first half of March 2021.  

The negative side of the ‘Super Peso’ 

However, Siller also points out that a greater strength of the peso affects the families that receive remittances, since it reduces purchasing power when transferring them from dollars to pesos. 

“Exporters have also been affected by the appreciation of the peso. On balance, the rapid appreciation of the peso affects the economy more than it benefits,” Siller said. 

Under this scenario, from the Mexican Institute of Finance Executives (IMEF) they pointed out that among the advantages of exchange rate appreciation, imports of inputs for the industry are favored, it makes it convenient to advance debt payments in dollars and encourages outbound tourism from Mexicans. 

“The main factors that have led to this trend: the depreciation of the US dollar against other currencies in the world; excess global liquidity; the significant interest rate differential between Mexico and the United States, favored by the movements of the Bank of Mexico; and the flows of remittances, foreign investment and exports”, according to the IMEF. 

This Tuesday, the Mexican peso closed at 17.07 units per dollar, according to Banxico. 

Source: El Financiero