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The peso depreciates against the dollar at 19.95

The peso starts the session with little change compared to Thursday’s close, showing a depreciation of 0.07% or 1.3 cents and trading around 19.95 pesos per dollar, with the exchange rate touching a minimum of 19.9142 and a maximum of 19.9790 pesos per dollar.

In the foreign exchange market, the main crosses show a mixed performance, although most currencies are gaining ground against the dollar, as a result of a greater appetite for risk in global financial markets.

The dollar weighted index begins the session with a 0.11% decline, accumulating a 0.70% weekly decline, the highest for a week since the third week of December 2020.

The greater appetite for risk is related to the publication of China‘s economic growth during the first quarter of 2021, which stood at an annual rate of 18.3%, similar to the market’s expectation of 18.5 percent. At a quarterly rate, the economy grew 0.6 percent.

It is worth mentioning that, during the first quarter of 2020, the Chinese economy contracted 6.8% annually due to the initial impact of the Covid pandemic19, so part of the growth published last night is due to a rebound effect due to the low base comparison.

The peso

In the capital markets, the main global indices show gains, the Shenzhen CSI closed the session on Friday with an advance of 0.35%, while the Hang Seng of Hong Kong advanced 0.61 percent.

In Europe, the main capital market indices register an average gain of 0.60%, with Germany standing out, advancing 1.06% and the London FTSE 100 with 0.52 percent.

Meanwile, in the futures market, the main US indices show a moderate and uniform advance of 0.20% in the three main indices, so they are expected to start the session with gains.

Risk appetite drives commodity prices, although progress is moderate.

The price of WTI starts with a gain of 0.17% trading at 63.55 dollars per barrel, while industrial metals advance on average less than 1 percentage point.

Building

Regarding economic indicators, a few moments ago the construction permits for March were published in the United States, showing a monthly growth of 2.7%, exceeding market expectations of 1.7 percent.

On the other hand, housing starts grew at a monthly rate of 19.4%, also exceeding expectations of a monthly growth of 13.5 percent.

It should be noted that, with this growth, housing starts were at an annualized rate of 1.74 million, the highest since June 2006.

The accelerated growth of housing starts was mainly due to two factors: 1) a rebound is observed from the winter months when low temperatures and the growth in the number of coronavirus infections slowed down the industry and 2) a greater increase continues to be observed. demand for houses, given a change in consumption patterns as a result of the pandemic.

During the session, the exchange rate is expected to trade between 19.89 and 20.02 pesos per dollar.

The euro starts the session with an appreciation of 0.09%, trading at 1.1978 dollars per euro, while the pound gains 0.09% and is trading at 1.3799 dollars per pound.

Money Market and debt

In the United States, the 10-year Treasury yield remains unchanged at 1.57%, while in Mexico the 10-year M bond yield remains unchanged at 6.52 percent.

Derivatives market and the peso

To hedge against a depreciation of the peso beyond 20 pesos per dollar, a purchase option (call), with an exercise date within 1 month has a premium of 1.85% 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 19.9900 at 1 month, 20.3375 at 6 months and 20.7786 pesos per dollar at one year.

 

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE

 

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