The Mexican peso is one of the best-performing currencies in 2022 and it appears things can only get better once 2023 comes.

According to British bank Barclays, the Mexican peso could appreciate by over 4% against the US dollar anytime between now and the end of 2023 according to a couple of Barclays analysts per a report from El Economista.

The analysts said during a press conference held on Friday, Oct. 28, that the peso could end up trading at 19 to the US dollar at the end of 2023. If this happens, it would be an appreciation of roughly 4.2% compared to its value of approximately 19.83 to the greenback at 11 a.m. Central Standard Time on Monday, Oct. 24.

One of the analysts, Gabriel Casillas, Barclays’ head of Latin America Economics and Erick Martinez, a New York-based exchange rate strategist, one US dollar will buy 19.75 at the end of this year.

"Fiscal austerity, Mexico's attractiveness for nearshoring and a shrinking investment universe, as Russia is no longer an option and Chinese politics are posing worries, are factors making Mexico look like candy," Casillas said at a news conference via Reuters.

Their claim goes against the prediction of Moody. Martinez noted how he was in clear disagreement with it.

The exchange rate strategist added that the Mexican peso could experience episodes of volatility if economic troubles deepen at the beginning of 2023, but would regain attractive levels as central banks ease their monetary policies.

"The dollar is overvalued precisely because the U.S. Federal Reserve's monetary policy is very restrictive," Martinez quipped. "As it relaxes, the dollar will return to its fair value. I don't see the dollar becoming stronger in a context of crisis in the United States."

However, Martinez cautions that the peso could suffer if the global economic situation gets worse – particularly in early 2023. However, he added that this would eventually be weathered especially once central banks relax monetary policy once inflation has been brought under control.

500 Mexican pesos notes on a table with traditional Mexican ornament.
500 Mexican pesos notes on a table with traditional Mexican ornament. Getty Images | Daniel Sambraus

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