The United States dollar is gaining ground on the currencies of emerging economies, however, the currencies of developed countries did not lose ground in the year.
Some of the currencies that have gained ground to the dollar this year are the euro with an appreciation of 6.94%, followed by the Swiss franc that gains 4.36%, the British pound with an appreciation of 1.45%, the Chinese yuan with 2.02% and the Russian ruble with 2.38% appreciation so far in 2021.
The Mexican peso is one of currencies, of emerging nations, with greater resistance along with the Brazilian real.
This year the local currency has a slight depreciation of 3.02% against the US currency, standing at a level of 20.5519 units per dollar until last Friday.
For its part, the Brazilian real is trading at 5.40 units per dollar and a 5.15% loss for the year.
Among emerging currencies, the Turkish lira is mostly depreciated in the year with a 35.83% loss against the dollar, at a level of 10.0625 lira per dollar. The Colombian peso has a loss of 13.77% and is trading at 3,884.80 units per greenback.
The Chilean peso is trading at 796.79 units per dollar and has a loss of 12.26% in the year, followed by the Japanese yen with 114.16 units per dollar and 10.43% of accumulated depreciation in 2021.
“The (Mexican) peso operates at a loss due to the expectation that the demand for oil will decrease. OPEC indicated in its report that it expects demand to average 99.49 million barrels per day in the fourth quarter of 2021, as higher energy prices could affect demand, ”Janneth Quiroz mentioned.
It gets stronger
The dollar index, which measures the strength of the greenback against a basket of six reference currencies, is currently at a level of 95.52 points, with a gain of 6.20% so far this year, a level that is also the highest since July 20, 2020, when it stood at 95.83 points.
After closing its third consecutive week with gains, the dollar index has a 2% gain in that period, going from 93.94 points to 95.52 points this Monday.
The truth is that the United States currency is recovering strength as a safe haven asset among investors, mainly due to the increase in inflation, but also due to the beginning of tapering by the United States Federal Reserve, a situation that has generated volatility among currencies in the forex market
Janneth Quiroz Zamora, deputy director of Economic Analysis at Casa de Bolsa Monex, said that “after the high US inflation figure for October raised the stakes on a rise in the Federal Reserve’s benchmark interest rate in mid-2022, increases the attractiveness of refuge instruments ”.
The Monex specialist commented that the strength of European currencies is due to the stability of macroeconomic variables, such as “industrial activity in the Eurozone, which in September fell 0.2% per month, exceeding market forecasts for a 0.5% drop. %, since the supply restrictions and the high prices of raw materials reduced the growth of the sector ”.
David A. Meier, economist at Julius Baer, said that “bearish factors in the dollar, such as the broadening of the global recovery, which may bolster appetite for risk, or the shift of the US growth advantage to the eurozone , bullish factors dominated, such as the gradual reduction of asset purchases by the Fed, as no rate hikes were expected before 2023.
Higher pressure
James Salazar, deputy director of Economic Analysis at CIBanco, explained that “towards 2022, the pressure against the peso will increase, in view of the expectation that the Federal Reserve will start with the rise in interest rates, which would cause us to see levels of 21 pesos per dollar ”.
With the inflation data for October in the United States of 6.20%, “investors anticipate that there will be pressure on the Fed and the first rise in interest rates will be in June,” Salazar explained.
The inflation problem, he said, is due to the repercussion it has with the monetary policy decisions of the central banks, in addition to the impact on economic variables and with it economic growth.
Reference-www.eleconomista.com.mx