In the month, the peso closed with an appreciation of 4.57% or 96.9 cents, trading around 20.21 pesos per dollar, being the highest monthly appreciation since May of this year, when the peso recovered 8.27 percent.

Before this date, the greatest monthly appreciation of the peso was in July 2018. The peso was the ninth most appreciated currency in the exchange market. With the above, in the year the peso accumulates a depreciation of 6.72% or 1 peso and 27 cents.

The most appreciated currencies were the following:

1. Colombian peso, with an advance of 6.94%, being its highest monthly advance since March 2016.
2. Norwegian krone. It appreciated 6.73%, its highest monthly appreciation since September 2010.
3. Brazilian real. It appreciated 6.72%, an appreciation not seen since October 2018.
4. Turkish lira, which closed with an appreciation of 6.22%, the highest monthly advance since November 2018.
5. Czech crown closed with an appreciation of 5.92%, the highest monthly advance since July this year.

The peso

The appreciation of the peso during November was mainly due to three factors:

First factor

A general strengthening of the US dollar, the result of an increased appetite for risk.

During November, it was announced that at least three of the vaccines that have been developed to combat the pandemic have had positive results and are in final tests.

The expectation that an effective vaccine will become available in the coming months raises the probability of a more accelerated economic recovery in 2021.

For this reason, the financial markets have also decided to ignore most of the negative news about the new cases of Covid19 globally.

Second factor

The increased appetite for risk also boosted oil prices. The WTI closed November trading at 45.47 dollars per barrel, which is equivalent to an increase in its price of 27.05%, while the price of Brent increased by 27.04% and closed trading at 47.59 dollars per barrel.

This is their largest monthly increase since May when the price of WTI and Brent increased by 88.38% and 39.81%. This allowed several currencies, mainly those of emerging economies and commodity-producing countries, to register a significant appreciation.

Third factor

In the United States, the presidential elections were held, where the virtual winner was Democrat Joe Biden. It should be remembered that the Democratic party is associated with a more spending-oriented fiscal policy and the market is waiting for new stimuli to be announced.

Covid-19

It is worth mentioning that, during the month, the exchange rate temporarily pierced the barrier of 20.00 pesos per dollar, a level that has been consolidated as a key support.

For now, market participants are keeping an eye on the evolution of the pandemic and news about the progress in the approval of vaccines.

If the approval and distribution of a vaccine is confirmed, it is likely that the financial markets will observe another wave of optimism, allowing the exchange rate to strongly pierce the support of 20.00 pesos per dollar, towards levels close to 19.40 pesos per dollar, last seen once in early March of this year.

In the month, the exchange rate touched a minimum of 19.9382 and a maximum of 21.9782 pesos, the euro touched a minimum of 1.1602 and a maximum of 1.2003 dollars per euro. Finally, the euro peso touched a minimum of 23.7267 and a maximum of 25.5244 pesos per euro.

At the close, the interbank quotes for sale were 20,2090 pesos per dollar, 1.3326 dollars per pound and 1.1927 dollars per euro.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE