The peso closed the session with an appreciation of 0.24% or 5.4 cents, trading around 22.61 pesos per dollar, gaining ground next to the South African rand which appreciated 0.52% and stood at 16.85 rands per dollar, in a movement contrary to what was observed for most currencies that lost ground.

The peso’s performance was mainly due to speculation, since it did not respond to fundamentals in Mexico or to the general sentiment of global financial markets, which during the session was negative.

Capital markets closed with losses during the European session and in the American session, due to a lower appetite for risk, due to the fact that uncertainty persists about the future of the economic recovery.

High levels of stock indices are the product of expansive monetary policies across the globe, which drive down the discount rate with which companies’ valuations are made.

Therefore, capital market levels are the result of a denominator effect of low interest rates. There are sessions, like today, where the market notes that the pandemic is far from over and this has a negative effect on the expectation of future flows of most companies.

The peso and Covid-19

During the session, it was announced that the rate of coronavirus infections in the United States accelerated, where 61,791 cases were recorded on the day, the highest on record, setting record figures in Florida and California.

In California alone, 149 deaths from coronavirus were reported in one day, above the April high of 115 deaths. The increasing number of cases is likely to lead to further falls in the capital market and risk aversion in the financial markets.

Nervousness in the capital market also strengthened the dollar, whose weighted index advanced 0.21%. The currencies with the highest losses were the Norwegian krone, which lost 0.88%, the Canadian dollar, which lost 0.56% and the euro, which lost 0.43 percent.

Indicators of Banxico

In the session, the peso-dollar exchange rate reached a minimum of 22.5436 and a maximum of 22.7678 pesos per dollar, the euro-peso reached a minimum of 25.4731 and a maximum of 25.8286 pesos per euro in the interbank prices for sale. For its part, the euro hit a low of 1.1280 and a high of $ 1.1371 per euro.

At the close, the interbank quotations for sale were 22.6128 pesos per dollar, 1.2607 dollars per pound and 1.1284 dollars per euro.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE