The peso (19.94 vs. dollar), Treasury bonds and inflation

The peso closed the session with a depreciation of 0.30% or 5.9 cents, trading around 19.94 pesos per dollar, with the exchange rate touching a minimum of 19.8272 and a maximum of 20.0451 pesos per dollar, a level not seen since May 13.

In the wide basket of main crosses, the Mexican peso, the Mexican peso, was the second most depreciated currency behind the Japanese yen, which lost 0.59%, followed by the Turkish lira with 0.42% and the South Korean won with 0.09 percent.

Like the yen, the depreciation of the peso occurred alongside an increase in interest rates in the secondary market in the United States, where the rate of 10-year Treasury bonds rose 2.5 basis points to 1.60%, touching a high of 1.6233 percent.

The increases in interest rates on Treasury bonds were due to the publication in the United States of initial requests for unemployment support corresponding to the previous week, which stood at 406 thousand, falling for the fourth consecutive week and reaching its lowest level since before the pandemic began in March 2020.

It should be remembered that favorable economic indicators for the labor market contribute to the speculation that the Federal Reserve could moderate its flexible stance in the coming months, pushing up interest rates on Treasury bonds.

Yesterday afternoon, the vice president of supervision of the Federal Reserve, Randal Quarles, who is a voting member of the Committee, said that it will be important to begin discussing plans to reduce the pace of asset purchases, referring to the easing program monetary value of 120 billion dollars a month.

His comments also contributed to the rise in interest rates.

The mexican peso

In the foreign exchange market, the dollar weighted index closed with little change, showing a moderate decline of 0.03%, as a mixed performance was observed in the basket of main crosses.

An increase in the volatility of the exchange rate in Friday’s session is not ruled out, as it is the last session of the month for the US markets that will remain closed on Monday for the commemoration of Memorial Day.

Banco de México‘s monetary policy minutes were published in the morning, highlighting that, despite the fact that the risks to inflation are biased upward, inflationary pressures continue to be considered transitory.

The minutes send the signal that the conduct of monetary policy will continue to be prudent.

There were no exchange rate movements associated with the publication of the minutes, as they do not modify expectations for the future of interest rates.

In the session, the euro touched a minimum of 1.2175 and a maximum of 1.2215 dollars per euro. For its part, the euro peso touched a minimum of 24.1919 and a maximum of 24.4291 pesos per euro.

At the close, the interbank quotes for sale stood at 19.9402 pesos per dollar, 1.4203 dollars per pound and 1.2196 dollars per euro.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE