The Mexican peso closed the first session of the week with an appreciation of 0.67% or 13.5 cents, with the exchange rate trading close to 19.82 pesos per dollar, after reaching a low of 19.7366 pesos in the morning.
In the foreign exchange market, the Mexican peso was the most appreciated currency among the 31 main crosses of the dollar, due to internal factors related to the federal and local elections that took place on Sunday, June 6.
The main source of optimism was that Morena and her allies did not obtain a qualified majority in the Chamber of Deputies, reducing the likelihood of constitutional reforms that inhibit investment and weaken Mexico‘s institutional framework.
It should be remembered that in the last year there have been episodes of volatility, after some initiatives of law and reforms that generate a greater perception of risk in Mexico.
From a technical point of view, the exchange rate continues to face key support at the level of 19.70 pesos per dollar, which could be drilled in the coming sessions, bringing the exchange rate closer to the minimum in the year of 19.55 pesos per dollar.
Another factor that contributed to the appreciation of the peso, although to a lesser extent, was a general weakening of the US dollar against its main crosses, 0.21% according to the dollar weighted index.
In fact, in the broad basket of major crosses, 21 currencies gained ground against the dollar, while 2 were unchanged and 8 lost ground.
The weakness of the dollar is due to the fact that at the weekend the Secretary of the Treasury of the United States, Janet Yellen, indicated that the administration of Joe Biden must push its spending plans, even if this generates inflationary pressures and increases to the interest rate , adding that any increase in prices would vanish in 2022.
Yellen added that inflation and interest rates have been too low for a decade, so it would be a good thing if they are at higher levels.
Of the depreciated currencies, the Peruvian sol stands out (-2.47%), which reached a new historical maximum of 3.9451 soles per dollar, after the 92% vote count gave the left-wing candidate Pedro Castillo the advantage with 50.1 %, Vs. 49.9% of Keiko Fujimori.
Due to the close of the elections, a winner has not yet been declared, so the uncertainty also generates pressure on the Peruvian sun. The second most depreciated currency was the South African rand with 0.74%.
It is possible that this weakening of the dollar is taking place in anticipation of some relevant economic indicators that will be published in the week, such as inflation in the United States, scheduled for Thursday.
In Mexico, the publication of inflation to the month of May will also be relevant, which will be released on Wednesday morning and is estimated to be below 6% per year.
In the session, the euro touched a minimum of 1.2145 and a maximum of 1.2202 dollars per euro. For its part, the euro peso touched a minimum of 24.0137 and a maximum of 24.2978 pesos per euro.
At the close, interbank prices for sale were 19.8203 pesos per dollar, 1.4186 dollars per pound and 1.2196 dollars per euro.
Gabriela Siller; PhD
Director of Economic-Financial Analysis.