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The peso depreciates against the dollar at 20.65 units

The peso starts the session with a depreciation of 0.34% or 6.9 cents, trading around 20.65 pesos per dollar, with the exchange rate touching a minimum of 20.5396 and a maximum of 20.8346 pesos.

The depreciation of the peso is the result of a strengthening of the US dollar, which according to the dollar weighted index increases 0.31%, after showing little change during the session on Monday.

In the bond market, the yield rate of the 10-year Treasury bonds showed a decline of 4.7 basis points, standing at 1.65%, due to an increase in the demand for risk-free assets.

The greater perception of risk in global financial markets is due to the fact that, despite the efforts of advanced economies to vaccinate their population and the number of daily cases decreased compared to December and January, high rates of infections continue to be observed. newspapers.

In Germany, Chancellor Angela Merkel decided to implement severe lockdown measures during spring break, shutting down most non-essential businesses for 5 days starting April 1, to prevent a third wave of Covid-19 cases.

According to Merkel, in the country the hospital occupation is growing again.

In the United States, the number of daily infections has stabilized, slowing its downward trend and reaching an average of 54,970 daily cases during March until Monday.

The peso

In the foreign exchange market, the most depreciated currencies are the New Zealand dollar with 1.82%, the Russian ruble with 1.27%, the Australian dollar with 0.86% and the Czech koruna with 0.85 percent.

The depreciation of the Mexican peso is moderate compared to other currencies and is ranked 13th among depreciated currencies.

The Japanese yen, being a safe haven currency, ranks as the most appreciated, advancing 0.22%, followed by the Israeli shekel with 0.19 percent.

Caution is also observed in capital markets, with the main European indices showing a moderate decline averaging 0.12%. The London FTSE 100 lost 0.16% and in Germany the DAX fell 0.08 percent.

Meanwhile, the futures market shows that losses are likely to be observed in the American session, mainly from companies in the industrial sector.

The Dow Jones could start with a decline close to 0.35%, while the S&P 500 with a decline of 0.25 percent.

In contrast, the Nasdaq is targeting a positive open of 0.21 percent.

It should be remembered that, in recent months, the broadcasters of the technology sector have won before the expectation of a growth in the number of coronavirus infections.

The oil

For their part, the main oil mixes start the session with heavy losses due to two factors: 1) the strengthening of the US dollar, which makes the commodity less accessible to investors who have positions in other currencies and 2) the downside risks to demand, given the tightening of confinement measures in Europe due to the risk of a third wave of coronavirus cases.

The price of WTI lost 3.77% to 59.24 dollars a barrel, while the price of brent contracted 3.88% to 62.11 dollars.

It should be added that today the attention of the markets will also be in the appearances of the President of the Federal Reserve, Jerome Powell and the Secretary of the Treasury, Janet Yellen, before the Committee on Financial Services of the House of Representatives from the 10:00 a.m., while tomorrow, Wednesday, they will appear before the Senate Banking Committee at 8:00 a.m. Central Mexico time.

Regarding economic indicators, in Mexico, the National Survey of Construction Companies (ENEC) for January, revealed that the value of production grew at a monthly rate of 0.55%, after falling 0.94% in December, maintaining an unstable performance.

It should be remembered that construction, being classified as an essential activity, was not severely limited by the tightening of sanitary measures in the month.

In annual terms, it showed a contraction of 18.92%, spinning 31 months of consecutive falls, being the longest period on record.


Regarding the value of production by subsector in original figures, a significant improvement was observed in civil engineering works showing an annual contraction of 16.95% after the fall of 20.99% in December.

During the month, the progress of flagship projects such as the Santa Lucía airport and the Mayan Train could have contributed to the advancement of civil engineering works.

At the state level, only 12 of the 32 entities in the country showed annual growth in their production value during January. Among the entities with the highest annual advances, Oaxaca (239.7), Tabasco (99.0%) and Chiapas (94.3 percent) stand out.

The production value in Oaxaca has shown growth of over 100% for four consecutive months, due to the fact that during 2019 Oaxaca experienced a crisis in the construction industry, with more than 80% of construction companies facing financial problems due to the shortage of projects, so the strong increases are due to a low comparison base.

Similarly, construction in Oaxaca has been driven by the implementation in the state of the road program by the Ministry of Communications and Transportation (SCT).

The peso and construction

On the other hand, Nuevo León, the state that represents the highest percentage of total production (11.4%), showed an annual contraction of 19.6% in January. While, the entity that showed the deepest annual decrease was Tlaxcala (-83.9%), spinning 10 months of consecutive annual falls.

In this entity, 97% of the companies in the construction industry are micro, small and medium-sized companies, so the health crisis has made it difficult for them to survive.

In the short term, construction will be limited by weak domestic demand, limits on public investment and the uncertainty generated by some legislative proposals that inhibit investment.

During the session, the exchange rate is expected to trade between 20.52 and 20.82 pesos per dollar. The euro starts the session with a depreciation of 0.49%, trading at 1.1875 dollars per euro, while the pound loses 0.61% and is trading at 1.3780 dollars per pound.

Money market and debt

In the United States, the yield on the 10-year Treasury bonds decreased by 4.7 basis points, at a rate of 1.65%, while in Mexico the yield on the 10-year M bonds remained unchanged, at 6.66 percent.

Derivatives market and the peso

To hedge against a depreciation of the peso beyond 21 pesos per dollar, a purchase option (call), with an exercise date within 1 month has a premium of 1.89% 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 20.7109 at 1 month, 21.0650 at 6 months and 21.5232 pesos per dollar at one year.


Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE


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