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The strength of the national economy and the weakening of the dollar are the factors that fortify our currency

By: Teodoro Rentería Arróyave, Journalist and Writer.

According to an analysis titled “El euro, la Unidad Monetaria Asiática y el Renminbi amenazan la supremacía del dólar” (The euro, the Asian Monetary Unit, and the Renminbi threaten the supremacy of the dollar), the recent strength of the Mexican peso can be attributed to a weakened US dollar and the solid fundamentals of the Mexican national economy, along with attractive domestic interest rates.

These factors reinforce the Mexican currency. This week, the exchange rate in Mexico broke the level of 17.50 pesos per dollar, reaching as low as 17.40 at some point on May 15th. This exchange rate parity level has not been observed since at least 2016, contrasting with the rate of 19.44 at the beginning of the year and the highest point in the last 12 months, which reached 21.04.

According to the analysis from the platform “Periodistas en español,” where we collaborate, the behavior of the peso is explained in-depth in an analysis titled “El euro, la Unidad Monetaria Asiática y el Renminbi amenazan la supremacía del dólar” (The euro, the Asian Monetary Unit, and the Renminbi threaten the supremacy of the dollar).

Half a century ago, the dominance of the US dollar in the international financial and commercial system was indisputable. In 1977, the dollar reached a peak of 85 percent as the predominant currency in currency reserves. By 2001, this position still hovered around 73 percent, but currently, it stands at around 58 percent.

The recent global transformations, including the gradual shift of the center of gravity from the West to the East, the complexities of US domestic politics, the growing international projection of China, and the assertiveness of countries in the Global South, have hindered the supremacy and status of the US dollar.

However, it is accepted that the US dollar remains, by far, the most important currency in global trade, currency transactions, SWIFT payments (Society for Worldwide Interbank Financial Telecommunication), and debt issued outside of the United States. Western financial agents, government officials, and renowned experts tend to downplay the concept of de-dollarization, arguing that a relatively weakened dollar does not necessarily imply its disappearance. Of course, nobody has claimed that the dollar is about to expire, but its decline is acknowledged.

Despite the controversial opinions, it is undeniable that the global system faces more complex, diverse, and plural challenges that involve currency competition and innovative financial pathways.

In summary, the strength of the Mexican peso can be explained by the solidity of the national economy and the weakening of the US dollar. Although the supremacy of the US dollar is being challenged by global transformations, it remains the most significant currency in international trade and financial transactions.

 

Journalist and writer; president of the National College of Journalism Graduates, CONALIPE; secretary of Social Development of the Latin American Federation of Journalists, FELAP; founding president and honorary life member of the Federation of Mexican Journalists Associations, FAPERMEX; member of the permanent Advisory Council of Club Primera Plana, Honorary Doctorate by the International University, and Academic Member of the National Academy of History and Geography, ANHG. I appreciate your comments and criticisms at teodororenteriaa@gmail.com. We can be heard on the frequencies throughout the Republic of Libertas Radio. We invite you to visit: www.felap.info, www.ciap-felap.org, www.fapermex.org, and www.clubprimeraplana.org, and the portal irradia noticias.com.

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