The peso begins the session with an appreciation of 1.31% or 31 cents, trading around 23.64 pesos per dollar and gaining ground alongside the currencies of commodity-producing countries and emerging economies, in the face of a considerable increase in oil prices.

The price of the WTI begins the session with an advance of 9.38%, trading at $ 32.19 per barrel, accumulating an increase of 27.28% in the last three sessions, given an increase in demand for crude oil in the spot market and a strengthening of the demand for oil in China that has reached levels similar to those observed before the coronavirus pandemic.

The greater demand is due to the more intensive use of automobiles, which generates the expectation that a similar pattern could occur globally, as the main economies affected by the coronavirus begin to normalize their activity.

The Brent price shows an increase of 6.06%, trading around $ 34.47 per barrel.

The most appreciated currencies in the wide basket of main crosses are the South African rand, with an advance of 1.15%, the Mexican peso with an advance of 1.31%, the Russian ruble with an appreciation of 0.99% and the Norwegian krone, which shows a 0.95 percent advance.

In the capital market, the main indexes in Europe show gains of over 2%, driven by increases in the prices of issuers in the transport and capital goods sector, energy (oil companies) and discretionary consumption, mainly companies in the automotive sector.

The peso and other currencies

The session will not publish relevant economic indicators in Mexico or the United States, so the exchange rate will probably fluctuate depending on the performance of other financial markets, such as the commodities and capital markets.

During the session, an exchange rate is expected, trading between 23.50 and 24.00 pesos per dollar. The euro starts the session trading at 1.0835 dollars per euro, which is equivalent to an appreciation of 0.14%, while the pound appreciates 0.47%, reaching 1.2173 dollars per pound.

Money and debt market

In the debt market, the yield on United States 10-year Treasury bonds increases 2.1 basis points, at a rate of 0.66%, while the yield on 10-year M bonds in Mexico decreases 1.8 basis points to 6.12 percent.

Derivatives market

To hedge against a depreciation of the peso beyond 25 pesos per dollar, a call option, with an exercise date within 1 month, has a 2.25% premium and represents the right but not the obligation to buy dollars in the level mentioned above.

On the other hand, the interbank forward for sale is at 23.7878 at 1 month, 24.2717 at 6 months and 24.7413 pesos per dollar at one year.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE