The peso closed the session with a strong appreciation of 1.18% or 26.2 cents, trading around 22.02 pesos per dollar and touching a minimum of 21.9608 pesos, a level not seen since June 16.

In the broad basket of major crosses, the Mexican peso is the third most appreciated currency, behind the Brazilian real (+ 1.36%) and the South African rand (+1.28 percent), as a result of a general weakening of the US dollar.

In the session, the dollar-weighted index registered a 0.91% drop, being the biggest drop since April 7, in the expectation that the Federal Reserve will maintain a widely accommodative language in its monetary policy announcement scheduled for Wednesday at 13:00 hours.

The Federal Reserve, unlike Banco de México, has a dual mandate of inflation in the objective of 2% and maximum employment, and the most recent data on the labor market in the United States point to a slow recovery, due to the fact that during June and July the number of coronavirus cases continued to grow.

The peso and precious metals

In the session, the price of gold touched a new all-time high of $ 1,945.72 per ounce, while silver hit an annual high of $ 24.6031, a level not seen since August 28, 2013.

It should be noted that the price of precious metals tends to rise in anticipation of a broadly accommodative monetary policy over an extended period of time, due to increased demand for metals because of their role as a store of value.

Finally, the weakening of the dollar is due to the continued uncertainty regarding the approval of the fiscal stimulus package in the United States, as Republicans are considering cutting weekly unemployment support benefits from $ 600 to $ 200, as part of a $ 1 trillion program, well below the Democratic $ 3.5 trillion package.

Indicators of Banxico

Negotiations are likely to last two weeks, and there is a risk that an agreement will not be reached before the August recess.

In the session, the peso-dollar reached a minimum of 21.9608 and a maximum of 22.3267 pesos per dollar in the interbank prices for sale. For its part, the euro hit a low of 1.1639 and a high of $ 1.1781 per euro.

Finally, the euro peso touched a minimum of 25.8157 and a maximum of 26.0495 pesos per euro.

At the close, the interbank prices for sale were at 22.02 pesos per dollar, 1.2869 dollars per pound and at 1.1746 dollars per euro.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE