The peso closed the session with an appreciation of 0.69% or 16.8 cents, trading around 24.20 pesos per dollar, despite the fact that the US dollar strengthened against most currencies.
The Mexican peso managed to maintain part of its overnight progress, after the federal government announced in the morning that economic activity in Mexico will begin to normalize, particularly the automotive, construction and mining industries, sectors that will be classified as essential. and that they will be able to operate from Monday.
The complete economic reopening was also announced in about 300 municipalities that have not reported cases of coronavirus.
Today the reaction of the exchange market with respect to Mexico was partially optimistic, since the reopening of key sectors for economic activity may moderate the economic impact of the coronavirus.
However, caution will prevail, because as has happened in other countries, there is a risk of new outbreaks.
Although the Mexican peso closed on positive ground, it cut its overnight gains after Federal Reserve chairman Jerome Powell ruled out the possibility of negative interest rates being implemented.
The US dollar rebounded against most currencies after Powell’s comments, registering a 0.29% advance according to that currency’s weighted index.
The peso and other currencies
Among the most depreciated currencies, the New Zealand dollar stood out, losing 1.48%, given the possibility that its central bank may adopt negative interest rates. The South African rand depreciated 0.46%, the Brazilian real lost 0.40% and the euro 0.29 percent.
Powell’s participation also generated nervousness because the economic outlook is negative. According to him, there are significant risks to economic growth that can cause a protracted recession and not a «V» type, as capital market participants have been speculating since April.
Capital markets in the United States reacted negatively to these prospects and a commitment to maintain a highly accommodative monetary stance was not enough. In the United States, the Dow Jones registered a fall of 2.17%, while the S&P 500 lost 1.75%. For its part, in Mexico, the CPI of the Mexican Stock Exchange lost 2.85%.
In the session, the exchange rate touched a minimum of 24,0076 pesos and a maximum of 24,3918 pesos. The euro-peso reached a minimum of 26,1061 and a maximum of 26.4644 pesos per euro in the interbank prices for sale. For its part, the euro touched a minimum of 1.0812 and a maximum of 1.0896 dollars per euro.
At the close, the interbank quotations for sale were located at 24,1960 pesos per dollar, 1.2226 dollars per pound and at 1.0816 dollars per euro.
Gabriela Siller; PhD
Director of Economic-Financial Analysis.
Banco BASE
