The peso starts the session with an appreciation of 0.51% or 10.3 cents trading around 19.97 pesos per dollar, with the exchange rate touching a minimum of 19.9621 and a maximum of 20.0991 pesos per dollar.

The appreciation of the peso continues to be the result of greater optimism in the financial markets, where gains are observed in the European capital markets and it is probable that the gains in the United States market will continue during the session, with the publication of results. quarterly reports from financial institutions.

Likewise, the appreciation of the peso continues to be the result of greater optimism in financial markets, where gains are observed in European capital markets and gains are likely to continue in the United States during the session, with the publication of quarterly results from institutions. financial

The peso

The dollar-weighted index reached its lowest in a month, falling today of 0.07 percent.

On the other hand, the exchange market highlights the depreciation of the Russian ruble, which loses 1.73%, trading at 77.12 rubles per dollar.

This happened because the United States announced sanctions against Russia, which include a ban on American companies from participating in primary placements of Russian debt.

In the bond market, the 10-year yield rate of Russian bonds shows an increase of 17 basis points, standing at 7.21 percent.

It should be added that a few moments ago, the White House announced that 32 Russian entities and individuals were also sanctioned, who made efforts to influence the 2020 presidential elections, as well as other acts of «disinformation and interference.»

Likewise, in collaboration with the European Union, the United Kingdom, Australia and Canada, the sanction of eight individuals associated with the Russian occupation of Crimea was announced.

US market

Regarding economic indicators, in the United States, retail sales for March were published that showed a monthly growth of 9.8%, well above the market’s expectation of 5.8% and being its highest monthly advance since May 2020.

During March, the increase in retail sales was driven by three main factors: 1) the distribution of direct checks for $ 1,400 included in the last approved fiscal package, 2) the progress in the vaccination campaign and 3) the best weather conditions, after frost limited consumption in February.

At an annual rate, retail sales showed an increase of 27.7%, spinning ten consecutive advances.

On the other hand, in the week that ended on April 10, 576 thousand new applications for unemployment support were reported, decreasing by 193 thousand from the revised level of the previous week, marking a minimum not seen since the week of March 14 2020.

Continuous applications for unemployment support, from those who are already receiving support or continue to wait, increased from 3,727 to 3,731 million.

Hydrocarbons Law and the peso

It is important to note that the appreciation of the peso this morning is the result of the weakness of the dollar and not of an individual strengthening of the peso, as there are still internal risks for the Mexican economic recovery.

Yesterday the Chamber of Deputies generally approved the reform of the Hydrocarbons Law, which raises the possibility of suspending operating permits for private companies for reasons of national security.

The reform that will now be discussed and voted on in the Senate has the capacity to severely inhibit investment in the energy sector.

During the session, the exchange rate is expected to trade between 19.91 and 20.12 pesos per dollar.

The euro starts the session with a depreciation of 0.05%, trading at 1.1974 dollars per euro, while the pound gains 0.20% and is trading at 1.3806 dollars per pound.

Money market and debt

In the United States, the yield on the 10-year Treasury bonds decreased by 3.5 basis points, at a rate of 1.60%, while in Mexico the yield on the 10-year M bonds remained unchanged at 6.65 percent.

Derivatives market and the peso

To hedge against a depreciation of the peso beyond 20.50 pesos per dollar, a purchase option (call), with an exercise date within 1 month has a premium of 1.16% and represents the right but not the obligation to buy dollars in the aforementioned level.

On the other hand, the interbank forward for sale is at 20.0684 at 1 month, 20.4210 at 6 months and 20.8697 pesos per dollar at one year.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE