English

The peso gains against the dollar with little change in the market

The peso closed the session with a moderate appreciation of 0.02%, trading around 19.91 pesos per dollar, showing little change compared to Friday’s close.

In the session, the exchange rate touched a minimum of 19.8600 and a maximum of 19.9577 pesos.

In the exchange market, the dollar had a minimum weakening of 0.04%, evidence that participants are waiting for the inflation data for the United States that is published on Wednesday morning and that could show an annual inflation of 3.7% during April , above inflation of 2.6% in March.

An inflation data higher than expected increases the probability that a corrective movement of the dollar will be observed that accumulates four sessions down in which it has lost 1.20 percent.

It should be added that, although little relevant economic information was published at the beginning of the week, in the coming days there will be relevant data and events, particularly for the Latin American economies.

In Mexico tomorrow the gross fixed investment and the private consumption indicator for the month of February will be published, while on Wednesday the industrial activity for the month of March is published and on Thursday the monetary policy decision of Banco de México is announced. where the rate is expected to remain unchanged at 4.0 percent.

In Brazil, April inflation is published on Tuesday, which is estimated at an annual rate of 6.74%, so additional pressures could fuel speculation of a more restrictive monetary stance by the Central Bank of Brazil, which has already raised the rate interest at 150 basis points during the year at 3.50 percent.

The peso

In Chile on Thursday there is a monetary policy announcement, where the rate is expected to remain unchanged at 0.50%, as inflation has not shot up, reaching around 3% during the first four months of the year.

On Thursday there will also be a monetary policy announcement in Peru, where the central bank is expected to keep the rate unchanged at 0.25%, although recent pressures against the Peruvian sol due to the presidential elections on June 6 could generate inflationary pressures , forcing the central bank to be more cautious.

In Peru inflation remains stable, hovering between 2.5 and 3.0% annually in the first four months of the year.

Finally, in Colombia, on Friday morning the economic growth of the first quarter will be published.

Although Mexico does not have as close an economic relationship with Latin American countries as it does with the United States, the reactions of financial markets to events in Latin America do have effects on the peso-dollar parity.

It should be remembered that the Mexican peso is the most liquid currency in the region and also operates 24 hours a day, so it is used to speculate on events in other Latin American countries.

In the coming days, in addition to the performance of the dollar, the exchange rate could move based on expectations for the monetary policy of Mexico and other countries in the region, as well as political risks in Colombia and Peru.

Chinese currency

In the session, the euro touched a minimum of 1.2132 and a maximum of 1.2178 dollars per euro, a level not seen since February 26.

For its part, the euro peso touched a minimum of 24.1440 and a maximum of 24.2566 pesos per euro. It is important to mention that the Chinese yuan registered an appreciation of 0.26% trading at 6.4166 yuan per dollar, touching a minimum of 6.4103 yuan, a level not seen since June 15, 2018.

Since April, the Chinese yuan has accumulated an appreciation of 2.08%, due to positive expectations for the country’s economic recovery.

The yuan has also been helped by the recent weakness of the dollar, particularly on Friday when US employment data fell below expectations.

At the close, the interbank quotes for sale stood at 19.9124 pesos per dollar, 1.4122 dollars per pound and 1.2133 dollars per euro.

 

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE

 

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