10 Pesos (Federation - Zacatecas) – Mexico

In 2003, Mexico's currency situation was characterized by a period of remarkable stability and strength for the Mexican peso, a significant turnaround from the turbulence of previous decades. The peso traded within a relatively narrow band, averaging approximately 10.5 to 11.0 pesos per US dollar for much of the year. This stability was largely attributed to a credible floating exchange rate regime, adopted after the 1994-95 "Tequila Crisis," which was now supported by substantial international reserves, prudent fiscal management, and a formal inflation-targeting framework implemented by the autonomous Bank of Mexico.

This favorable environment was underpinned by several key factors. High oil prices provided a boost to government revenues and the current account. Crucially, a steady influx of remittances from Mexicans working abroad, which reached record levels, provided a consistent source of foreign currency and supported domestic consumption. Furthermore, investor confidence was bolstered by Mexico's sound macroeconomic policies and its close economic integration with the United States under NAFTA, which ensured stable export earnings.

However, this stability was not without underlying concerns and vulnerabilities. The economy experienced a period of stagnation in 2003, with GDP growth near zero, partly due to a slowdown in the US economy. This highlighted Mexico's continued heavy dependence on its northern neighbor. Additionally, while inflation was declining, it remained persistently above the Bank of Mexico's target, constraining monetary policy. The overall picture of 2003, therefore, was one of a currency enjoying hard-won stability, but within an economy still facing significant structural challenges and external dependencies.