The peso closed the session with a depreciation of 1.94% or 46.4 cents, trading around 24.35 pesos per dollar and placing itself as the most depreciated currency in the exchange market.

The depreciation of the peso is mainly due to a deterioration in the perception of risk in Mexico, after several negative economic indicators were published.

On the one hand, in the morning the industrial activity indicator for March showed an annual fall of 4.91%, being the biggest decrease since October 2009, highlighting falls of over 6% in manufacturing and construction.

It should be noted that this data is from March and therefore does not yet reflect the severe impact of the coronavirus. Therefore, it is probable that during April historical contractions will be observed.

Regarding employment, in April the IMSS reported the loss of 555,000 jobs, being the biggest drop in the registry, which is explained by the downward economic trend and the effect of the coronavirus.

For comparison purposes, it is important to mention that during the entire crisis of 1995, nearly 600 thousand jobs were lost. In this year, the loss of jobs could approach a million. In the absence of an expansive fiscal policy, the recovery of these jobs will be difficult, which can increase structural unemployment.

Until April, the jobs most affected are those of lower-income people, which had an upward effect on the average daily contribution salary, which rose 1.08% to 403.6 pesos.

The peso and employment

The regions with the highest job destruction during April were southern Mexico City (-63,400), Nuevo León (-53,058) and Quintana Roo (-44,984).

It is important to add that caution was also observed in international financial markets, particularly in the capital market. This is due to the possibility of new outbreaks of the coronavirus being observed in countries that are resuming their economic activity. In the United States, Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, warned that new outbreaks are inevitable in states that are lifting quarantine measures prematurely.

During the session, the Presidents of the Dallas Regional Reserve and the St. Louis Regional Reserve, mentioned that the economic consequences caused by the coronavirus could deepen.

Kaplan mentioned that the US economy will need more stimuli to boost growth, while Bullard said that the closure of the economy could cause bankruptcies and a recession like that of the Great Depression.

In the session, the exchange rate touched a minimum of 23.7566 pesos and a maximum of 24.3438 pesos. The euro-peso reached a minimum of 25.7901 and a maximum of 26,4051 pesos per euro in the interbank prices for sale.

For its part, the euro touched a minimum of 1.0785 and a maximum of 1.0885 dollars per euro.

At the close, the interbank quotations for sale were 23.3500 pesos per dollar, 1.2263 dollars per pound and 1.0847 dollars per euro.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE