The peso closed the session with an appreciation of 0.42% or 8.4 cents, trading around 20.05 pesos per dollar, ranking as the third most depreciated currency in the wide basket of main crosses, behind the Norwegian krone, which depreciated 0.58% and the South African rand which lost 0.57 percent.
After 8:00 a.m., the exchange rate traded in a narrow channel between 20.01 and 20.07 pesos per dollar, due to low liquidity in global financial markets, since in the United States the markets remained closed for the Action Day of Thank you.
In the session, the Global Risk Perception Base Indicator (PPI) stood at -6 units, very close to its threshold of 0 units, which means that there is neither perception nor appetite for risk.
Within the indicator, the money market components, currencies, commodities, capitals and country risk show mixed results.
The depreciation of the peso occurred alongside a drop in the price of oil. The WTI showed a 1.58% decline, trading around $ 44.99 per barrel, while the Brent lost 1.67%, closing at $ 47.80 per barrel.
The oil price losses are mainly due to a correction to gains from previous sessions and news about the advance of the coronavirus pandemic.
The and barrier of 20.00
From a technical point of view, the exchange rate has shown difficulty in piercing the support of 20.00 pesos per dollar in a sustained manner, although it continues to show decreasing resistance at that level.
This formation of decreasing resistance towards the same support is usually followed by a volatile perforation, so the following sessions will be relevant for the trend that the exchange rate will have towards the end of the year.
The session highlighted the publication in Mexico of the Banco de México minutes.
According to the minutes, the majority of the members of the Governing Board emphasized the priority commitment to price stability, highlighting the importance of the Central Bank’s prudence in the current context, where inflation shows resistance to decrease.
All members stressed that the decision to keep rates unchanged is a pause and not an end point in the easing of the cycle. The majority (three members) indicate that they are observing the trajectory of inflation, while two members consider that (at the time of the last meeting) there is room to continue with the relaxation.
In view of the above and the recent decrease in inflation below 4.0% in the first half of November, it is highly probable that Banco de México will cut the interest rate again by 25 basis points within the next three months, with the highest probability in February 2021.
In the session, the exchange rate touched a minimum of 19.9384 and a maximum of 20.0667 pesos per dollar, the euro touched a minimum of 1.1885 and a maximum of 1.1941 dollars per euro. Finally, the euro peso touched a minimum of 23.7800 and a maximum of 23.8998 pesos per euro.
At the close, the interbank quotes for sale were 20.0490 pesos per dollar, 1.3358 dollars per pound and 1.1913 dollars per euro.
Gabriela Siller; PhD
Director of Economic-Financial Analysis.