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The peso loses against the dollar in 5 consecutive sessions

The peso closed the session with a depreciation of 0.44% or 9.2 cents, trading around 20.94 pesos per dollar, with the exchange rate touching a minimum of 20.6643 and a maximum of 20.9695 pesos per dollar.

It should be noted that the Mexican peso accumulates five consecutive sessions of depreciation, in which it accumulates a decline of 2.64% or 53.9 cents against the dollar.

In the session, the Mexican peso was the third most depreciated currency behind the Brazilian real, which lost 1.95% and the Colombian peso with 0.97 percent.

The peso

The two key factors behind the depreciation of the peso towards levels close to 21.00 pesos per dollar are a greater perception of global risk and a greater perception of relative risk in Mexico:

First factor

The greater perception of global risk was evident in the strengthening of the US dollar, which advanced against most of its main crosses, rising 0.28% in the session and 0.90% in the last two days, according to the dollar weighted index.

The above is mainly associated with the risk of a third wave of coronavirus cases globally.

Second factor

The greater aversion to risk on the Mexican economy was evident in the increase in the yield rates of Mexican bonds, where the 10-year M bond rose 22.2 basis points to 7.01%, accumulating a rise of 34 basis points in the last two sessions.

The 30-year bond rate rose 29 basis points to 7.97%, accumulating a rise of 47 basis points in the last two sessions.

Likewise, the increase has occurred with greater force in longer-term instruments, resulting in a steeper slope of the yield curve of government securities, as a result of an upward adjustment in inflation expectations.

In the morning it was published that inflation for the first half of March was at an annual rate of 4.12%, exceeding market expectations.

Interest rates and the peso

It should be remembered that an increase in interest rates occurs when the price of the bond falls, which generates the idea of ​​capital outflows in Mexico.

In the year, as of March 12, there has been an outflow of capital in government securities for 72,514.71 million pesos, which is equivalent to 28.2% of the capital outflow observed in 2020.

In the year, at the close of today, the rate of the 10-year M bonds accumulated an increase of 147 basis points.

Tomorrow, Banco de México‘s monetary policy announcement scheduled for 1:00 p.m. will be key, where Grupo Financiero Base anticipates that they will keep the interest rate unchanged at 4.00%.

In the session, the euro touched a low of 1.1810 and a high of 1.1853 dollars per euro.

Finally, the euro peso touched a minimum of 24.4536 and a maximum of 24.7740 pesos per euro.

At the close, the interbank quotes for sale stood at 20.9430 pesos per dollar, 1.3688 dollars per pound and 1.1813 dollars per euro.

 

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE

 

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