The peso appreciates 33 cents against the dollar

The peso closed the session with an appreciation of 1.35% or 32.9 cents, trading around 24.05 pesos per dollar, touching a minimum of 23.9298 pesos.

The peso’s rise was the consequence of a generalized increase in risk appetite in the financial markets, which allowed most currencies to gain ground.

In the session, the Global Risk Perception Base Indicator (PPI) was -217 units, which means high risk appetite. Within the index, the components of the foreign exchange, money, capital and country risk markets were consistent with a greater appetite for risk.

On the contrary, the commodities market closed the session with mixed results.

On the one hand, gold closed the session with gains, because despite the greater appetite for risk, there is still nervousness about global economic activity and the expectation that countries will fall into a wide recession.

For its part, the price of the main oil mixtures closed the session with losses as the nervousness surrounding excess supply continues.

The peso and the bonds

The appreciation of the peso occurred in tandem with a greater demand for Mexican government debt instruments in the secondary market.

In the session, the yield on 10-year M bonds fell 19.8 basis points to 6.09%, a new low in the year not seen since October 2016. For its part, the rate of return on dollar issues for the same term decreased. 21.1 basis points, standing at 4.16 percent.

The performance of the Brazilian real stood out in the exchange market, which closed with a depreciation of 2.07% at 5.8344 reais per dollar, a new all-time high.

The depreciation of the real is due to the fact that yesterday afternoon the Brazilian Central Bank announced a cut in the interest rate of 75 basis points to 3.0%, a cut higher than anticipated by the market, reaching a new record low.

According to the Central Bank of Brazil, the cut is a way of stimulating the economy in a recessionary and low inflation context. April inflation in that country is expected to be at 2.5% in its publication tomorrow Friday.

Working market

Early tomorrow, the attention of the markets will be on the publication of the April non-farm payroll in the United States, which is expected to show the destruction of more than 20 million jobs, bringing the unemployment rate to levels above 15 per hundred.

Market reaction may be limited, as estimates of job destruction have already been released in recent days in the ADP survey of the private sector and in initial claims for unemployment support.

In the session, the exchange rate touched a minimum of 23.9298 pesos and a maximum of 24.5381 pesos. The euro-peso reached a minimum of 25.8320 and a maximum of 26.4844 pesos per euro in the interbank prices for sale. For its part, the euro touched a minimum of 1.0767 and a maximum of 1.0834 dollars per euro.

At the close, the interbank quotations for sale were 24.0500 pesos per dollar, 1.2361 dollars per pound and 1.0830 dollars per euro.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE