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The peso depreciates against the dollar: it is listed at 19.89 units

The peso starts the session with a depreciation of 0.11% or 2.2 cents, trading around 19.89 pesos per dollar, with the exchange rate touching a minimum of 19.8612 and a maximum of 19.9362 pesos per dollar.

In the rest of the market there is no clear direction and the dollar weighted index shows little change compared to yesterday’s close, advancing 0.01%.

Outside the foreign exchange market, optimism is observed at a global level, with the main capital market indices in Europe advancing on average close to 0.60%, while the futures market points to gains at the opening for the US indices.

Likewise, in the commodity market, energy prices are advancing, with the WTI advancing 1.91% and trading close to 63.15 dollars per barrel.

The optimism in the global financial markets is associated with the publication of the leading PMI indicators for May for the countries of Europe.

The Eurozone manufacturing PMI indicator stood at 62.8 points, just 0.1 point below the previous month.

For its part, the services indicator continued to advance from 50.5 points in April to 55.1 points in May, exceeding expectations.

The foregoing shows that the growth engine during the second quarter of the year is the reactivation of the services sector. For its part, in the United Kingdom, the composite PMI rose from 60.7 to 62 points, reaching a new record high.

The mexican peso

Regarding economic indicators, in Mexico the Monthly Survey of Services (EMS) showed a real monthly increase of 3.05% in total income from the supply of goods and services during March, spinning two months up.

The monthly increase was driven by the improvement in epidemiological conditions, which allowed the relaxation of time and capacity restrictions in the service sector.

In annual terms, the total income of the services sector shows a contraction of 5.61%, spinning 16 months of consecutive setbacks, equaling the maximum period of consecutive annual falls observed in the previous crisis, from January 2009 to April 2010.

Revenues from services for the month of March continued to be 8.75% below the pre-pandemic level (February 2020) and 14.05% below the last peak in revenues observed in May 2018.

Tourism

Within the survey, six of the nine subsectors showed monthly advances.

The largest increase was observed in income from temporary accommodation services and restaurants, increasing 12.44% monthly, its largest increase since September 2020.

At an annual rate, this category shows a contraction of 5.95% and compared to the pre-pandemic level (February 2020) it continues to show a lag of 27.26%, recalling that this was one of the subsectors most affected by the containment measures.

The second highest monthly advance was observed in the income of leisure services, increasing 6.70%, its highest advance since August 2020.

However, this is the subsector that shows the greatest lag in its recovery, with an annual contraction of 30.81% and remaining 48.00% below the level of February 2020.

Starting in April, income from the supply of goods and services will show significant annual growth, but this is due to the low comparison base, since in April 2020, income from services fell 26.40% annually.

Commerce

For its part, INEGI published the results of the Monthly Survey on Commercial Companies (EMEC) corresponding to the month of March, which shows that real income from retail sales grew 3.6% during the month, the highest monthly growth since November 2020.

With this, retail sales show the first positive annual rate since January 2020, growing 1.8%, and at the same time achieving a complete recovery by exceeding its pre-pandemic level.

Within the indicator, all branches showed monthly growth with the exception of self-service stores (-0.1%) and sales of items for entertainment (-0.03 percent).

On the other hand, the greatest increases were seen in sales of furniture, computer equipment and other electronic devices (17.9%), articles for interior decoration (10.3%), cars and trucks (8.4%) and department stores (8.0%). hundred).

Covid-19 and peso

In annual terms, most of the branches show positive growth rates, with the exception of five that have not yet achieved a recovery from the pandemic: self-service stores (-12.3%); stationery, books, magazines and newspapers (-4.9%); pets, gifts, religious articles, and other articles of personal use (-4.3%); textile products, except clothing (-2.1%); and fuels, oils, greases and lubricants (-1.0 percent).

The rest of the branches show high annual growth rates, although in many of them they are due to the fact that the comparison base for March 2020 is very low given that an impact of the pandemic was already observed on that date.

When comparing the figures of March 2021 against those of February 2020, it is observed that 12 of the 22 branches are still at levels below the pre-pandemic level, particularly highlighting the sales of textiles, clothing, footwear, stationery, entertainment and personal use , which with respect to February show contractions of between 18% and 26 percent.

During the session, the exchange rate is expected to trade between 19.89 and 20.04 pesos per dollar.

The euro starts the session with a depreciation of 0.29%, trading at 1.2193 dollars per euro, while the pound advances 0.04% and is trading at 1.4195 dollars per pound.

Money market and debt

In the United States, the 10-year Treasury bond yield remains unchanged, at 1.62%, while in Mexico the 10-year M bond yield remains unchanged, at a rate of 6.89 percent.

Derivatives market and the peso

To hedge against a depreciation of the peso beyond 20.00 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 19.9895 at 1 month, 20.3530 at 6 months and 20.8492 pesos per dollar at one year.

 

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE

 

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