Mexican Presidential Hopeful Calls for Peso Depreciation to Drive Growth

The currency is being propped up artificially by the central bank’s record-high interest rates, Xochitl Galvez argues

Photographer: Susana Gonzalez/Bloomberg
By Maya Averbuch - Max de Haldevang
September 11, 2023 | 02:00 AM

Bloomberg — Mexico’s opposition presidential candidate Xochitl Galvez sees the “super peso” as harmful for the economy, arguing that the currency is being propped up artificially by the central bank’s record-high interest rates.

“The super peso has to do with the high interest rates in our country and it’s not entirely positive for the export industry,” she said in an interview on Thursday in Bloomberg’s Mexico City bureau. “We need a peso that really reflects what’s happening economically.”

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The Mexican peso has soared more than 50% between the height of the pandemic in early 2020 and July, the strongest rally by a major world currency over that period. President Andres Manuel Lopez Obrador has repeatedly touted the peso’s strength as proof the Mexican economy is doing well under his government, a view that Galvez said was reminiscent of older times.

The currency lost a bit of ground in recent days, dropping to 17.58 to the dollar, due to market anxiety over the US Federal Reserve potentially keeping interest rates higher for longer and weakness in the Chinese economy.


Galvez, a senator backed by a coalition of opposition parties, said the bank needed to cut rates from their current 11.25% to boost investment.

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“There won’t be productive investment while interest rates are sky high, so we need to start to lower interest rates,” she said, adding that businesspeople have no incentive to invest in the real economy while they can earn about 12% interest on local bonds.

Banxico, as Mexico’s central bank is known, hasn’t yet reached the point to start discussing a reduction in its key interest rate, Governor Victoria Rodriguez said last week, signaling the record rates will stay on for the foreseeable future.


Galvez, who grew up in a partly indigenous family in central Mexico and has campaigned on the fact that she became a successful businesswoman with her own company, said she didn’t have an ideal value for the peso in mind but wanted “an interest rate that lets you grow.”

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Despite representing the conservative PAN party in the coalition, she described herself as “center-left.” Galvez will face former Mexico City Mayor Claudia Sheinbaum in next June’s election.


Note: Corrected at 09:49hs (ET). “Devaluation” was mistakenly used in the headline and was replaced with “depreciation.”