As the year comes to a close, the US dollar experiences a negative close, marking its worst performance since 2020.
During the last trading session on Friday, December 29, the dollar index (DXY) registered a slight increase of 0.15%, reaching 101,060 units, according to data provided by Investing. This index measures the strength of the greenback against a basket that includes the six main currencies worldwide.
2023: A challenging year for the dollar
Despite a rebound in the final hours of the trading day, the dollar failed to recover from its negative performance during the last month of the year, experiencing a drop of more than 2% compared to the previous year. This marks the first year of decline for the coin since 2020, ending a two-year positive streak.
The Fed and its Unexpected change in December
2022 saw the dollar reach its highest in two decades, driven by the US Federal Reserve’s (Fed) hawkish stance and its aggressive increases in interest rates. However, in the last half of the current year, the Fed decided to keep rates unchanged, which had negative repercussions in December.
The dollar depreciated due to growing expectations that the Fed will end the upward cycle of interest rates to begin reducing them in 2024. Which has diverted the market’s attention, which now focuses on when the cuts will begin and how they will affect to inflation, marking a new not very positive scenario for the US currency.
Fed Odds and Their Impact on the Dollar
On New Year’s Eve, the odds that the Fed will keep interest rates unchanged in January stand at 83.5%, while the remaining 16.5% suggest the Fed could begin cuts as soon as January, according to projections. from CME’s FedWatch tool.
Any decision by the Fed in monetary policy will always directly affect the value of the dollar. On this occasion, the decrease in rates is perceived as a challenge for the greenback, since it reduces the attractiveness of assets denominated in that currency for investors seeking higher returns, according to analysts at Investing.
Dollar prices at the end of 2023 in Central America
After the fall of the dollar, the end of 2023 shows the following prices of the US dollar in Mexico and some Central American countries:
Exchange rate:
- Cuba: 120,0000 Cuban pesos (CUP) – 265,0000 Cuban pesos (CUP) in the Informal Foreign Exchange Market
- Mexico: 16.9725 Mexican pesos (MXN)
- Costa Rica: 519.59 Costa Rican colon (CRC)
- Guatemala: 7.8234 quetzales (GTQ)
- Honduras: 24.6756 lempiras (HNL)
- Nicaragua: 36,6027 Cordobas (NIO)
Purchase:
- Cuba: 110.40000 Cuban pesos (CUP) – 262.0000 Cuban pesos (CUP) in the Informal Foreign Exchange Market
- Mexico: 16.9600 Mexican pesos (MXN)
- Costa Rica: 506.95 Costa Rican colon (CRC)
- Guatemala: 7.6428 quetzales (GTQ)
- Honduras: 24.2242 lempiras (HNL)
- Nicaragua: 36,1512 Cordobas (NIO)
Sale:
- Cuba: 123.60000 Cuban pesos (CUP) – 265.0000 Cuban pesos (CUP) in the Informal Foreign Exchange Market
- Mexico: 16.9850 Mexican pesos (MXN)
- Costa Rica: 532.23 Costa Rican colon (CRC)
- Guatemala: 8.0039 quetzales (GTQ)
- Honduras: 25.1271 lempiras (HNL)
- Nicaragua: 37,0541 Cordobas (NIO)
Due to the celebration of the New Year, the financial markets will not reopen until Tuesday, January 2, since the first is considered a holiday at the federal level.
