Determinants of the peso-dollar exchange rate
In recent months, the appreciation of the Mexican peso against the U.S. dollar has garnered increasing attention in political discussions as well as everyday conversations. It has also become a focal point in academic circles. What is noteworthy is the tendency to adopt politicized positions and interpretations, often leaving unanswered the fundamental question of what determines the peso-dollar exchange rate.
This interest is heightened on days like today (June 6, 2023) when the exchange rate briefly reached $17.37 per dollar, the lowest level since April 2016. In this context, the following lines aim to shed light on a recurring question for economists and specialists in the field.