The peso closed the session with a depreciation of 0.26% or 5.3 cents, with the exchange rate trading around 20.19 pesos per dollar after hitting a maximum of 20.2431 and a minimum of 20.0742 pesos.
The peso ranked as the second most depreciated currency in the basket of 16 main crosses of the dollar, after the Brazilian real (-0.35%) and followed by the pound sterling (-0.20 percent).
This could be due to the following two factors:
The expectation that Banco de México will adopt a more expansive monetary stance and for a long period.
The deputy governor of this central institution, Jonathan Heath, explored the possibility that the February meeting would discuss resuming the downward cycle in interest rates, as early as April.
Heath pointed out that, given the 8.5% drop in economic activity in 2020, inflation could temporarily be above Banxico’s objective of 2% to 4%, to converge around 3% by the end of the year.
Although the deputy governor’s comment indicates that the interest rate could remain unchanged during February, it is possible that the market interpreted it as a confirmation that the interest rate could be cut in the year more than expected.
A movement on par with the Brazilian real.
Because the Mexican peso is the most liquid Latin American currency and is quoted 24 hours a day, it is used to speculate on other currencies such as the real.
The market is awaiting the approval of the 2021 Budget Law in Brazil, which would reduce restrictions on public spending and allow the government to apply a more aggressive fiscal policy to stimulate the economy.
Regarding economic indicators, the Automatic Data Processing (ADP) monthly employment survey was published in the United States, which estimated that 174,000 job positions were created in January, after the destruction of 140,000 jobs in December.
This data could be confirmed on Friday, when the Department of Labor Statistics of that country publishes the official employment report (non-agricultural payroll).
In the session, the euro touched a low of 1.2004 and a high of 1.2050 dollars per euro. Finally, the euro peso touched a minimum of 24.1453 and a maximum of 24.3391 pesos per euro.
At the close, the interbank quotes for sale stood at 20.1899 pesos per dollar, 1.3639 dollars per pound and 1.2035 dollars per euro.
Gabriela Siller; PhD
Director of Economic-Financial Analysis.