Few economic variables generate as much interest and concern in Mexico as the exchange rate.
Earlier in the year, various readers asked us about the possible behavior of the price of our currency against the dollar for this year.
Let me briefly consider the past.
Despite some episodes of volatility, the result was a very modest depreciation of our currency against the United States in 2021.
And, between the last day of November 2018 and the end of yesterday, there was virtually no depreciation.
But don’t think that it is basically because of the policy of this government.
In fact, our currency parity has more and more components that may not be directly related to the growth of the domestic economy.
The interaction of large amounts of pesos in international markets has given rise to the fundamental definition of parity in large financial centres.
Obviously, the balance of public finance and monetary policy has had some effect.
As can be seen in cases like Turkey or Argentina, if an internal disaster occurs in the management of financial policy, we will run an investor against our currency which will induce a strong depreciation, no matter what is involved. global financial market.
So what can we expect for 2022?
Perhaps the most relevant data in the financial world for this year will be the monetary policy normalization process involving a cycle of interest rate hikes.
At the Federal Reserve, the notion that this increase should happen by March is gaining more and more space.
If this process is sufficiently systematic and predictable, the growth will not bring sudden movement of capital.
If the Bank of Mexico follows the decisions of the Federal Reserve and adjusts rates upward, we may have a parity that maintains a trajectory with essentially smooth moves, which is 21 per dollar. cannot go above.
But if the adjustments were sudden or unexpected, if investors tried to anticipate the decisions of the Radral Reserve, or if the Bank of Mexico decided not to increase rates, we could have large capital movements that could fluctuate. with equality. Possibly keep the price above 21 pesos.
A systematic outflow of capital, as we did last year, does not affect the price of our currency, as can be seen in 2021. It would have been very different if the roughly $25 billion left over had done so in a few weeks.
Another factor that cannot be ignored in this perspective is the behavior of the international economy.
We will have an investment community that is more likely to remain calm if the issue of global supply chain displacement is resolved gradually and if inflation begins to trend downward over the next few months.
In 2020 and 2021, the spike in forex speculation happened at different moments of the outbreak of the pandemic.
Going forward, what can be seen is that, if a variant does not emerge that associates higher infectivity with greater virulence than omicron, it is most likely that we are slowly moving on to relative normality. Will return or at least in a situation where COVID will no longer arise. an estimate.
The old normality that many have longed for is not going to return. But perhaps some of the most aggressive features of economic activity can be mitigated and stopped affecting them this year.
Therefore, if you ask me what should be taken into account in forecasting the possible behavior of our currency parity in 2022, I will tell you that the main thing will be inflation and the actions of monetary authorities.
The key will be there.