The peso closed the week with a depreciation of 0.56% or 12.5 cents, trading around 22.57 pesos per dollar, hitting a minimum of 22.2562 and a maximum of 22.7798 pesos. The performance of the exchange market was mixed, although most currencies gained ground against the dollar.

In the broad basket of main crosses, the depreciated currencies were the Indonesian rupiah (-1.82%), the Russian ruble (-1.60%), the Brazilian real (-0.97%), the Colombian peso (-0.80%), the peso Argentine (-0.76%) and the Mexican peso (-0.56%), therefore, at the close, the peso was the sixth most depreciated currency.

During the week, the exchange rate showed a lateral behavior, slowing appreciations when it reached a level of 22.30 pesos per dollar and stopping losses, when it exceeded the level of 22.75 pesos per dollar. The sessions were mixed, as episodes of nervousness and optimism were observed.

The peso and the context

The factors that allowed the weekly depreciation of the peso were the following:

First factor

During the week, nervousness related to the growth of coronavirus cases continued to be observed globally and particularly in the United States and Mexico.

From last Friday to today, the number of infected in the United States grew by 438,136 cases, being the highest on record for equal periods since the pandemic began.

For its part, in Mexico, the barrier of 300 thousand confirmed cases was exceeded, reaching a total of 324,041 cases until Thursday.

Second factor

Doubts remain regarding the process of recovery in the United States labor market, as applications for unemployment support are falling, but at a slower than expected rate.

The requests for unemployment support from the previous week stood at 1.30 million, down only 10 thousand, above the 1.25 million requests expected by the market.

Third factor

In the commodity market, the price of oil saw sessions of losses, in the expectation that OPEC + will reduce cuts in oil production, which generated losses for the peso and other currencies of commodity and crude oil producing economies. WTI closed the week with a gain of 0.12%, while Brent lost 0.18 percent.

There were also factors that allowed weight recovery in some sessions, mainly:

News of the development of a vaccine against Covid-19 was released, raising demand for higher-risk assets, albeit temporarily.

Quarterly reports were published in the United States, which have generally been positive. Inside the reports, broadcasters have announced that there is stability despite the pandemic, particularly those in the financial sector that is particularly sensitive to episodes of recession.

Quotes

In the week between Wednesday, July 8 and Tuesday, July 14, the net speculative positions in favor of the peso decreased 20.75% or 3,109 contracts to 11,871 contracts, each one of 500 thousand pesos, being the third consecutive week that they are reduced.

Indicators of Banxico

In the week, the euro-peso reached a minimum of 25.3526 and a maximum of 25.8946 pesos per euro in the interbank prices for sale. For its part, the euro touched a minimum of 1.1299 and a maximum of $ 1.1452 per euro, showing a weekly appreciation of 1.19%, being the largest weekly advance since the beginning of June.

The maximum price of the euro had not been seen since March 10. The appreciation of the European currency is due to the expectation that additional funds of 750 billion euros will soon be approved to support the economies of the European Union most affected by the pandemic.

At the close, the interbank prices for sale were 22.5700 pesos per dollar, 1.2567 dollars per pound and 1.1435 dollars per euro.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE