The peso closed the week with a depreciation of 0.48% or 10.75 cents, trading around 22.38 pesos per dollar, losing ground along with the main currencies of emerging economies, including all currencies of Latin American economies.

The performance of the exchange rate was marked by a strong depreciation of the peso during the first sessions of the week, reaching a price of 22,9097 pesos, a level not seen since July 1.

This was due to a generalized correction in favor of the US dollar, whose index accumulated five consecutive weeks down.

From a technical point of view, during the week the exchange rate managed to pierce the key resistance of the 50-day moving average, which stands at 22.37 pesos per dollar, which increases the probability that the exchange rate will rise to levels close to 23 pesos per dollar in subsequent sessions.

In the basket of Latin American currencies, the Mexican peso was the least depreciated, losing 0.48%, followed by the Peruvian sol that lost 0.55%, the Argentine peso with 0.62%, the Colombian peso with 1.06%, the Brazilian real with 3.57% and the Chilean peso, with 3.80 percent.

The currencies of emerging economies were among the most affected, since at the global level there is still uncertainty about the future of the economic recovery.

On the other hand, there are still doubts about the approval of the new fiscal stimulus package in the United States as no progress was made and it is likely that Donald Trump will issue an executive order to temporarily extend the unemployment support measures, pending the fact that the Congress resumes negotiations in September.

The peso and prospects

It is important to note that in the week between Wednesday, July 29 and Tuesday, August 4, speculative positions in favor of the peso in the Chicago futures market fell by 72.4% or 7,865 contracts to 2,999, each of 500 thousand pesos.

This shows that the positioning in favor of the peso is being reduced and there is a greater risk of depreciation during August.

In the foreign exchange market, four of the six most depreciated currencies were Latin American: the Argentine peso, the Colombian peso, the Brazilian real and the South African rand.

The other two depreciated currencies were the South African rand, which lost 3.13% and the Turkish lira, with a drop of 4.26%. It is worth mentioning that the Turkish lira reached a historical price of 7.3662 lire per dollar, after the Central Bank reduced its intervention in the market, allowing a greater degree of exchange rate floating.

To offset the depreciation of the lira, the Bank announced the adoption of a tighter monetary policy.

The oil

In weekly balance, few currencies closed with gains, standing out the South Korean won that appreciated 0.54%, the Norwegian krone with 0.51% and the Canadian dollar with 0.23%, the above probably due to the increase in the price of oil during the week.

The WTI closed with an advance of 3.18%, trading at 41.55 dollars per barrel, driven by the publication of positive indicators for manufacturing and the services sector at a global level.

Oil prices also rose as crude inventories in the United States fell 7.37 million barrels during the previous week, accumulating a decline of 20.58 million barrels in the last four weeks.

During the week, the exchange rate traded between a minimum of 22.2543 and a maximum of 22.9097 pesos per dollar, while the euro traded between a minimum of 1.1696 and a maximum of 1.1916 dollars per euro. For its part, the Canadian dollar traded between a minimum of 1.3234 and a maximum of 1.3451 Canadian dollars per dollar.

At the close, the interbank prices for sale were 22.3840 pesos per dollar, 1.3057 dollars per pound and 11785 dollars per euro.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE