The peso starts the session with a depreciation of 0.96% or 19.1 cents, trading around 20.13 pesos per dollar, with the exchange rate trading between a minimum of 19.9222 and a maximum of 20.1653 pesos.

The exchange rate has overcome the resistance of 20.00 pesos, given a greater perception of risk with respect to Mexico, due to the direct effects of the cold wave in several northern states and the response of the federal government to the event.

In fact, the Mexican peso is the most depreciated currency in the basket of 16 major dollar crosses, followed by the South African rand, which lost 0.58 percent.

Electricity

Since yesterday, the cold left about 4.8 million users without electricity in various states of the country, after the supply of natural gas from the state of Texas was interrupted, according to a statement from the Federal Electricity Commission (CFE).

The power outages have been intermittent and have extended to Tuesday.

In the commodity markets, the price of natural gas at some delivery points rose from $ 3 to $ 300 per BTU.

Reform

 Yesterday the Federal Government reinforced its effort to promote the electricity reform, using the recent power cut as an argument in favor of autonomy.

Yesterday, Cofece said in a statement that said reform violates the conditions of competition in the sector, since it gives priority to the generation and supply of energy from CFE plants, energy that is not necessarily cheaper.

This would result in higher rates for consumers or an increase in subsidies.

If the reform that would limit the participation of private parties in the production of electricity in the country advances, the risk of sanctions by the countries that make up the T-MEC would increase.

The peso and oil

In the raw materials market, upward pressures from various commodities continue, with the oil price standing out as the WTI advances 0.37% and is trading at 59.69 dollars per barrel.

The increase in the price of energy is directly associated with the frosts in the state of Texas and the interruptions in production.

Global optimism is seen in other financial markets, mainly in the Asian and European capital markets, and gains are likely to be seen during the US session, pushing the S&P 500 and Dow Jones indices to new record highs.

In the money market, the 10-year Treasury bond yield rate shows an increase of 4.7 basis points and reached a maximum of 1.2652%, a level not seen since March 19, 2020, as demand for the instrument as shelter.

The optimism of global financial markets is related to the sustained progress in vaccination processes in advanced economies and the decrease in daily cases of coronavirus.

During the session, the exchange rate is expected to trade between 20.08 and 20.33 pesos per dollar.

The euro starts the session with a depreciation of 0.06%, trading at 1.2122 dollars per euro, while the pound loses 0.07% and is trading at 1.3893 dollars per pound.

Money market and debt

In the United States, the yield on 10-year Treasury bonds increases by 4.7 basis points, to 1.25%, while in Mexico the yield on 10-year M bonds increases by 3.7 basis points, at a rate of 5,655 percent.

The peso and derivatives market

To hedge against a depreciation of the peso beyond 20.50 pesos per dollar, a purchase option (call), with an exercise date within 1 month has a premium of 1.38% and represents the right but not the obligation to buy dollars in the aforementioned level.

On the other hand, the interbank forward for sale is at 20.1300 at 1 month, 20.4510 at 6 months and 20.8490 pesos per dollar at one year.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE