The peso appreciates 30.2 cents against the dollar

The peso closed the session with an appreciation of 1.43% or 30.2 cents, trading around 20.89 pesos per dollar, with the exchange rate touching a minimum of 20.8719 and a maximum of 21.2851 pesos.

With this, the exchange rate accumulates two sessions of downward correction, in which the peso has appreciated 2.81 percent.

The Mexican peso was ranked as the third most appreciated currency in the wide basket of main crosses, behind the Brazilian real that advanced 2.37% and the South African rand with 1.50 percent.

In the foreign exchange market, the dollar weighted index fell 0.29 percent for the second consecutive session.

The appreciation of the peso and the performance of the foreign exchange market was due to a decrease in speculation related to the possibility that the Fed would adopt a less flexible monetary stance in the face of the accelerated economic recovery in the United States.

Peso

The factors that allowed this during the session were:

First factor

Inflation in the United States stood at 1.7% annually during February, in line with market expectations, while core inflation was at 1.3%, below the expectation of 1.4 percent.

Monthly inflation was 0.4% and was driven by gasoline prices (+ 6.4%), representing more than half of the increase in the Consumer Price Index, which implies that there is no upward pressure on the component underlying inflation.

The appreciation of the peso against the dollar accelerated immediately after the publication of inflation at 7:30 am.

Second factor

The auction of $ 38 billion of 10-year Treasuries was successful.

At 12:00 hours, the demand was 2.38 times what was auctioned, in line with the average of the eight previous auctions of the same instrument (2.37 times).

For its part, the highest rate was 1.52%, that is, above the 1.15% of the last equivalent auction held on February 10 and the highest since the auction of February 12, 2020 (1.61 percent ).

However, the highest rate in the auction was below the rate in the secondary market, which reached 1.56% in the hours prior to the auction. The exchange rate pierced the support of 20.95 pesos in the minutes after the Treasury bond auction.

Stimulus package and the peso

At the close, the 10-year Treasury bond rate stood at 1.52%, unchanged from yesterday’s close, touching a low of 1.50 percent.

Tomorrow the bond market will continue to be key, as $ 24 billion of 30-year Treasury bonds will be auctioned. The results will be announced at 12:00 hours.

It is important to add that today the package of fiscal stimuli for 1.9 trillion dollars was finally approved by the House of Representatives of the United States, which will now be sent to the president to be signed on Friday.

The news did not have an effect on financial markets in the short term, as it was already an event discounted by the market.

However, it contributes to the accelerated economic recovery process that has caused increases in interest rates on Treasury bonds and a strengthening of the dollar.

It is not ruled out that rates will rise again in subsequent sessions, generating upward pressure on the exchange rate.

In the session, the euro touched a low of 1.1869 and a high of 1.1930 dollars per euro.

Finally, the euro peso touched a minimum of 24.8887 and a maximum of 25.2634 pesos per euro.

At the close, interbank prices for sale were 20.8930 pesos per dollar, 1.3935 dollars per pound and 1.1930 dollars per euro.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE