The peso closed the session with a depreciation of 0.38% or 7.6 cents, trading around 19.98 pesos per dollar, erasing the overnight gains that had led the exchange rate to a minimum of 19.7158 pesos per dollar.
The depreciation of the peso was the result of a return in the perception of risk to global financial markets during the American session, as the news about the sustained advance of the coronavirus in several countries, including the United States, dominated.
In the UK, Prime Minister Boris Johnson imposed a new lockdown, forcing schools to close and urging the population to stay home.
The lockdown will be in effect until February 15 and will probably have negative effects on the country’s economic activity, particularly tertiary activities and non-essential services.
The risk that some countries will see a second drop in economic activity, that is, a recession in the shape of a “W”, caused the correction of the session.
Electoral process in the United States
Another factor that also contributes to the nervousness of the markets is caution, prior to the elections that will be held tomorrow for two US Senate seats corresponding to the state of Georgia.
In the state, for a candidate to be a winner, it is necessary to obtain more than 50% of the votes, something that did not happen in November and that requires tomorrow’s voting.
The results will be decisive for the control of the Senate, because if the Democrats win both seats, the party would win 50% of the seats.
It is worth mentioning that, according to the United States constitution, the vice president in turn is also president of the Senate and has a vote only for a tiebreaker when an internal vote is divided, so that a victory for the Democrats tomorrow, in the two seats, would give the party effective control of the Senate. Republicans have held control of the Senate since 2014.
In the foreign exchange market, the most depreciated currencies were the Brazilian real with 1.51%, followed by the South African rand with 0.80% and the pound sterling with 0.72 percent.
The dollar weighted index managed to erase its losses, closing with an advance of 0.04 percent.
In the capital markets, the three major US indices closed with losses, with the S&P 500 losing 1.48% and the Nasdaq falling 1.47 percent.
The commodity market, particularly energy prices, also reversed their gains. The WTI closed the session with a fall of 2.33%, trading at 47.39 dollars per barrel.
On the other hand, the Mexican government issued this morning 50-year bonds (maturing in 2071), for a total of 3 billion dollars at a yield rate of 3.75% and a coupon rate of 3.75%. According to the Ministry of Finance, the operation was carried out simultaneously in two markets, the Taipei Stock Exchange and the Luxembourg Stock Exchange.
Indicators of Banxico
The document of the Ministry of Finance indicates that the coupon rate of 3.75% is the lowest in long-term placements over 30 years. The demand for the placement was 3.33 times the amount placed and 210 institutional investors participated internationally.
In the session, the exchange rate touched a minimum of 19.7158 and a maximum of 19.9923 pesos per dollar, the euro touched a minimum of 1.2221 and a maximum of 1.2309 dollars per euro. Finally, the euro peso touched a minimum of 24.1847 and a maximum of 24.4756 pesos per euro.
At the close, the interbank quotes for sale stood at 19.9800 pesos per dollar, 1.3571 dollars per pound and 1.2247 dollars per euro.
Gabriela Siller; PhD
Director of Economic-Financial Analysis.