The peso closed the week with an appreciation of 0.73% or 15.5 cents, trading around 21.12 pesos per dollar, being the sixth consecutive week that the Mexican peso appreciated.
The peso had not appreciated so many consecutive weeks since December 2018.
During the week, the exchange rate touched a minimum of 20.8452 pesos, a level not seen since March 11, and a maximum of 21.1311 pesos per dollar.
The peso and context
The appreciation of the peso during the last six weeks has been mainly due to four factors:
The dollar remains weak due to the monetary policy of the Federal Reserve, which is expected to maintain a broadly accommodative stance at least until 2023, as the economic recovery is expected to be slow. On Wednesday the Fed announced its monetary policy and updated economic forecasts. Although the update anticipates an economic contraction of 3.7% in 2020, less than the previously expected contraction of 6.5%, the growth forecasts for 2021 and 2021 were adjusted downwards to 3.5 and 3.0% respectively.
The attractiveness of interest rates, since in Mexico the rate remains high relative to other economies and this has led to the return of capital. Since September 1, an average daily flow of 2,363 million pesos has been observed to government securities denominated in pesos. As of September 8 alone, 14,117.4 million dollars in this type of instruments have entered the country.
There have been episodes of optimism related to progress in the approval of a vaccine against the coronavirus, allowing currencies from emerging economies to regain ground. So far this month, the three most appreciated currencies against the dollar are the South African rand with 3.98%, the Mexican peso with 3.69% and the Brazilian real with 2.36 percent. Among the 10 most appreciated currencies, only the Japanese yen belongs to an advanced economy and accumulates an appreciation of 1.22 percent.
Speculative positions in favor of the peso have risen. In the Chicago futures market, net speculative positions awaiting a peso appreciation have risen for three consecutive weeks. Only in the week between Wednesday, September 9 and Tuesday, September 15, net positions in favor of the peso rose 216.15% or 18,098 contracts, to a total of 26,471 contracts, each of 500 thousand pesos, its highest level since the middle of March.
In the session, the exchange rate touched a minimum of 20.8452 and a maximum of 21.3081 pesos, the euro touched a minimum of 1.1738 and a maximum of 1.1900 dollars per euro. Finally, the euro peso touched a minimum of 24.6842 and a maximum of 25.2377 pesos per euro.
At the close, the interbank quotes for sale stood at 21.1200 pesos per dollar, 1.2923 dollars per pound and 1.1848 dollars per euro.
Gabriela Siller; PhD
Director of Economic-Financial Analysis.