The peso depreciates 25 cents against the dollar

The peso begins the session with a depreciation of 1.17% or 25 cents, trading around 21.56 pesos per dollar, with the exchange rate touching a minimum of 21.2141 and a maximum of 21.6357 pesos per dollar, a level not seen since November 4 of 2020, when the exchange rate reached a maximum of 21.9782 pesos per dollar.

It should be noted that from the minimum in the year of 19.5494 pesos, reached on January 21, to the maximum today, the Mexican peso accumulates a depreciation of 2 pesos and 9 cents or 10.67 percent.

The depreciation of the peso this morning is related to a strengthening of the US dollar, whose weighted index increased 0.48% in the session and 1.83% in the last three days.

In the foreign exchange market, all currencies lose ground against the dollar, with the Turkish lira being the most depreciated, losing 2.04%, followed by the Brazilian real with 1.30%, the Mexican peso with 1.17% and the South African rand with 0.96 percent.

The strengthening of the dollar continues to be supported by the expectation of a solid economic recovery in the United States, which could lead to an increasingly less accommodative monetary policy.

In the bond market, the yield rate on 10-year Treasury bonds shows an increase of 3.3 basis points, reaching 1.60%, close to the maximum in the year of 1.6238 percent.

Notably, in the United States, the Senate approved the $ 1.9 trillion stimulus package proposed by Joe Biden.

Now the House of Representatives is expected to vote tomorrow, Tuesday, to approve this version, and then send it to the White House.

The peso and the IMF

On the other hand, today at 9:00 am, the Secretary of the Treasury, Yanet Jellen, will give a lecture at an International Monetary Fund event on women in the economy.

It is unlikely that she will make major announcements about US fiscal policy, so no movements in the exchange rate are expected from her participation in the event.

In the commodities market, the WTI price starts the session with a 0.29% decline, settling around 65.90 dollars per barrel. During the night it reached a maximum of 67.98 dpb, a new maximum in the year and a level not seen since October 23, 2018.

Oil prices could continue their upward trend, after OPEC and allied countries decided last week not to significantly increase oil production, despite the fact that demand is in a recovery stage.

Mexican market

Regarding economic indicators, in February the Consumer Confidence Indicator stood at 38.4 points, representing a zero growth compared to January and after the two previous months there was greater optimism due to the start of the vaccination plan.

The stagnation of consumer confidence was mainly due to the deterioration of epidemiological conditions during the first half of February, which caused thirteen states of the country to place themselves at the epidemiological red traffic light.

Consumer confidence is 4.9 points below the level observed 12 months ago.

For its part, in Germany, industrial production fell at a monthly rate of 2.5% during January, while the market anticipated a decrease of 0.4 percent.

In its annual comparison, this equates to a 3.9 percent drop.

During the session, the exchange rate is expected to trade between 21.35 and 21.72 pesos per dollar.

The euro starts the session with a depreciation of 0.35%, trading at 1.1873 dollars per euro, while the pound gains 0.11% and is trading at 1.3856 dollars per pound.

Money market and debt

In the United States, the yield on the 10-year Treasury bonds increased by 2.5 basis points, to 1.59%, while in Mexico the yield on the 10-year M bonds remained unchanged, at a rate of 6.30 percent.

Derivatives market and the peso

To hedge against a depreciation of the peso beyond 22 pesos per dollar, a purchase option (call), with an exercise date within 1 month has a premium of 1.91% and represents the right but not the obligation to buy dollars in the aforementioned level.

On the other hand, the interbank forward for sale is at 21.5962 at 1 month, 21.9540 at 6 months and 22.4047 pesos per dollar at one year.

 

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE