General

The peso gains against the dollar: it is listed at 20.61

The peso closed the session with a moderate appreciation of 0.19% or 3.8 cents, trading around 20.61 pesos per dollar, with the exchange rate touching a minimum of 20.5236 and a maximum of 20.7309 pesos per dollar.

In the first two sessions of the week, the peso accumulates an appreciation of 0.40% compared to Friday’s close.

The exchange market was calm, with the dollar weighted index losing 0.02%, the lowest daily variation since December 8, 2020.

Peso

The appreciation of the peso and the stability of the dollar was due to the following three factors:

First factor

The market is waiting for the Federal Reserve‘s monetary policy announcement scheduled for tomorrow at 12:00 hours, where it is expected that the projections of the Open Market Operations Committee of economic growth, inflation and the trajectory of the monetary policy interest rate.

The publication is relevant because it is the first update since December 16 and in the last three months new fiscal stimuli have been approved and in turn a vaccination process began that has been accelerated in the case of the United States, improving significantly economic expectations.

In the December projections, the Fed expected the United States to grow at a rate close to 4.2% in 2021, with inflation hovering around 1.8%.

Second factor

In the United States, unfavorable economic indicators were released, temporarily reducing speculation associated with the accelerating economic recovery and the possibility that the Fed will adopt a less flexible stance.

On the one hand, February retail sales showed a monthly contraction of 3.0%, after growing 7.6% during January.

On the other hand, industrial production contracted at a monthly rate of 2.2%, after growing 1.1% in January.

In both cases, the contractions are due to transitory factors, as low temperatures in mid-February slowed production and consumption, mainly in the state of Texas that suffered most of the damage.

It is important to add that the market recognizes these data as a transitory impact that does not significantly affect the economic expectations of the coming months, so a further strengthening of the US dollar is not ruled out.

Third factor

Favorable demand for Treasury bonds continues to be observed in the primary market.

Today at 11:00 am in central Mexico, the results of an auction of 24 billion dollars in 20-year Treasury bonds were announced.

Although the highest rate was 2.29%, above the previous auction for the same term, which was 1.92%, the demand was 2.51 times what was auctioned, considerably higher than the demand of 2.15 times in the previous auction on May 17. February and the highest since June 17, 2020.

The minimum of the exchange rate during the session, of 20.5236 pesos per dollar, was observed at 11:28 am, minutes after the Treasury bond auction.

The peso and quotes

In the session, the euro touched a low of 1.1883 and a high of 1.1952 dollars per euro. Finally, the euro peso touched a minimum of 24.4324 and a maximum of 24.7229 pesos per euro.

At the close, interbank prices for sale were 20.6104 pesos per dollar, 1.3892 dollars per pound and 1.1900 dollars per euro.

 

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE

 

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