The peso closed the session with an appreciation of 0.26% or 6.2 cents, trading around 24.00 pesos per dollar, advancing in the face of greater optimism in global financial markets due to the expectation that several of the economies affected by the coronavirus will continue to relax their restrictions to mobility and allowing the gradual opening of businesses.

Most currencies gained ground against the dollar, particularly those of oil-producing countries such as the Russian ruble which appreciated 1.46% and the Norwegian krone which advanced 0.72 percent.

The price of the WTI registered an advance of 20.40% to $ 24.55 per barrel, as the expectation that oil production will decrease and demand will gradually recover is maintained.

On the other hand, in Mexico, the minutes of Banco de México’s last monetary policy decision were published, when it was decided to cut the interest rate 50 basis points to 6 percent.

According to the minutes, it is expected that nearly 700,000 jobs were lost in April alone, compared to the 2009 crisis when around 600,000 were lost in 12 months. Furthermore, the effects of the pandemic can be aggravated if economic policies are insufficient.

The peso and prices

Regarding inflation, it was mentioned in the minutes that the decrease was mainly due to energy prices. It was also mentioned that some agricultural products increased, but it is expected that it will be temporary, due to the greater demand in the face of the pandemic.

Given this, inflation in April is expected to be below the target, but in the long term it will converge towards Banxico’s goal. One of the members highlighted that in the short and medium term the price index loses relevance as it has an economy that cannot consume freely, and the dynamics that will occur when the containment measures are lifted are unknown.

The loss of accuracy in the measurement of various indicators, including inflation, due to the pandemic was also highlighted.

In the session, the exchange rate touched a minimum of 23.7845 pesos and a maximum of 24.1693 pesos. The euro-peso reached a minimum of 25.7910 and a maximum of 26.3288 pesos per euro in the interbank prices for sale. For its part, the euro touched a minimum of 1.0826 and a maximum of 1.0926 dollars per euro.

At the close, the interbank quotations for sale were located at 24,0010 pesos per dollar, 1.2436 dollars per pound and at 1.0837 dollars per euro.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE