The peso closed the session with a depreciation of 1.59% or 32.4 cents, trading around 20.75 pesos per dollar, with the exchange rate touching a minimum of 20.4440 and a maximum of 20.8333 pesos.

In the foreign exchange market, the Mexican peso was the most depreciated currency, followed by the Brazilian real with 1.32%, the Colombian peso with 1.07% and the Turkish lira with 0.78%, showing weakness mainly for the currencies of emerging economies.

The peso

The depreciation of the Mexican peso is the result of the following factors:

First factor

The perception of risk with respect to Mexico has increased due to:

• Lag in the Covid-19 vaccination campaign.
• The approval of the opinion on the reform of the Electricity Industry Law.
• Possibility of blackouts due to the low natural gas storage capacity in the country.
• The announcement that fiscal support to Pemex will continue.

Second factor

Contagion effect of the Brazilian real. The real depreciated 1.33%, being at some moments of the session the most depreciated currency in the market, after President Jair Bolsonaro fired the head of Petrobras for a disagreement regarding oil prices.

The market fears that the Bolsonaro administration will abandon its free-market stance and turn to interventionism.

In the capital market, the Ibovespa closed with a drop of 4.76%, the largest daily decline since April 24, 2020.

Exchange rate and the peso

In the last six sessions, the peso has accumulated a depreciation of 4.0% or 80 cents.

It should be noted that the factors that have caused the weakness of the peso are mainly internal and could continue to generate pressures that could lead the exchange rate in the short term to a level of 21.00 pesos per dollar, to later move towards technical resistance of 21.50 pesos per dollar.

It is important to add that the performance of the exchange rate was disconnected today from the performance of the rest of the exchange market, where the dollar weakened 0.10% according to the weighted index.

In the session, the euro touched a low of 1.2091 and a high of 1.2169 dollars per euro. Finally, the euro peso touched a minimum of 24.7306 and a maximum of 25.2891 pesos per euro.

At the close, the interbank quotes for sale stood at 20.7530 pesos per dollar, 1.4063 dollars per pound and 1.2154 dollars per euro.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE