The peso depreciates against the dollar under pressure from elections

The peso closed the session with a depreciation of 0.29% or 5.8 cents, trading around 20.26 pesos per dollar, with the exchange rate touching a minimum of 20.1584 and a maximum of 20.2851 pesos.

The Mexican peso was the fourth most depreciated currency in the session.

From a technical point of view, the exchange rate accumulates four sessions, consolidating at levels above 20.10 pesos per dollar and oscillating around the 100-day moving average at the 20.23 pesos level, a sign that additional upward pressure could be observed to the exchange rate during the month.

It is important to note that the exchange rate could rise temporarily in the run-up to the federal elections on June 6, so levels between 20.50 and 20.70 pesos per dollar are not ruled out in the coming weeks.

During the session, the behavior of the exchange rate was lateral, a sign that the market is waiting for relevant economic information for Friday’s session, mainly inflation in April in Mexico and the creation of jobs in April in the United States.

A lateral behavior was also observed for the dollar weighted index, which closed with a moderate decline of 0.04%.

The peso

It should be added that the most depreciated currencies during the session were the Colombian peso with 0.51% and the Chilean peso with 0.40 percent.

In the last five sessions, the Colombian peso accumulates a depreciation of 4.07%, while in the year it ranks as the currency with the greatest losses in the wide basket of main crosses with a depreciation of 12.25%, reaching a maximum in the year of 3,875.51 Colombian pesos per dollar.

This is due to the riots and violence in recent days in the face of resistance to the approval of a tax reform that involves tax increases.

The new finance minister has said that the tax reform is necessary and they are working to submit a proposal that can be approved by the end of June, this with the aim of avoiding cuts to the credit rating.

Rating agencies and currencies

Currently, of the three most important rating agencies, two (Standard & Poor’s and Fitch) rate Colombia‘s debt at the lower limit of investment grade, that is, at one notch of speculative grade, while one rating agency (Moody’s) places it two notches away from losing your investment grade.

The three rating agencies assign the Colombian debt a negative outlook.

In the session, the euro touched a low of 1.1986 and a high of 1.2027 dollars per euro.

Finally, the euro peso touched a minimum of 24.2045 and a maximum of 24.3417 pesos per euro.

At the close, interbank quotes for sale were 20,2587 pesos per dollar, 1,3908 dollars per pound and 1,2005 dollars per euro.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE