The peso closed the session with a depreciation of 1.38% or 33.7 cents, trading around 24.83 pesos per dollar, ranking as one of the most depreciated currencies along with the Brazilian real that lost 1.69 percent.

Today, most currencies of commodity-producing countries gained ground against the dollar, as oil prices have recovered, well the contract price for the delivery of the WTI in June rose 23.15% to $ 16.97 per barrel.

The recovery in crude oil comes on the speculation that the drop in oil production in the United States will be fast enough to prevent storage capacity from saturating in a few weeks.

Generally, the peso benefits when the oil price rises, so today’s negative performance could be evidence that there is a greater perception of relative risk with respect to Mexico, mainly due to the absence of expansive fiscal policy measures that directly address the needs of companies most affected by the recession. In the first four days of the week, the peso accumulates a fall of 4.77% or 1 peso and 13 cents.

The peso and the COVID-19

Globally, risks still persist, so there is a high probability that the exchange rate will rise again above 25 pesos per dollar.

It should be noted that, during the session, the capital market in the United States erased its gains, after it was disclosed in the media that the antiviral Remdesivir from the pharmaceutical company Gilead Sciences, did not achieve positive results in its first clinical trials, where cases of adverse drug reaction were also observed.

The results are not official and more information could be released in subsequent days.

Although the rate of infection in Europe and the United States has decreased, economic activity is unlikely to normalize rapidly. Today it was revealed that, in Harbin, a city in northern China, with about 10 million inhabitants, containment measures have again been imposed in the face of a resurgence of coronavirus cases.

The bonds

On the other hand, in Mexico, the Ministry of Finance and Public Credit (SCHP) made the first exchange of government securities for Market Makers.

The operation was for an amount of 9,528 million pesos and was carried out with Banco de México as financial agent. The transaction consisted of exchanging M Bonds maturing in 2047 for M Bonds maturing between 2020 and 2024.

The SCHP reported that this operation was made in response to the great volatility observed in the financial markets in recent days and clarified that no additional debt was incurred.

In the session, the exchange rate touched a minimum of 24.3202 pesos and a maximum of 24.8350 pesos. The euro-peso reached a minimum of 26.2726 and a maximum of 26.8271 pesos per euro in the interbank prices for sale. For its part, the euro touched a minimum of 1.0756 and a maximum of 1.0847 dollars per euro.

At the close, the interbank quotations for sale were located at 24.8264 pesos per dollar, 1.2345 dollars per pound and at 1.0768 dollars per euro.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE