Peso appreciates after sanctions from Western countries to Russia

The Mexican peso appreciated moderately compared to American dollar this Tuesday. The local currency benefited from an increased appetite for risky assets in a market that remains attentive to news on Ukraine.

The exchange rate ended operations at 20.2646 units against a record of 20.2972 units per dollar yesterday, with official data from the Bank of Mexico (Banxico). That means a profit of 3.26 cents or 0.16 percent.

The pair traded between a high of 20.3003 and a low of 20.1574, at its best level since late October. The Dollar Index (DXY), which compares the greenback to six currencies, was up 0.18% at 96.20 units.

Early in the financial markets, an increase in appetite for risky assets was observed, after some countries led by the United States imposed less severe sanctions on Russia than expected.

The Kremlin decided yesterday to support the independence of two separatist areas of Ukraine and sent troops to those places to support the process. The decision was harshly criticized by other nations that issued threats.

Give up part of the advance

The local currency gave up part of the advance as the dollar strengthened hand in hand with US Treasury bond yields, with traders warned of the possibility of a monetary policy error.

“The market is pricing in a monetary policy error,” Nancy Davis, managing partner and director of Quadratic Capital Management, told Reuters. “The market believes the Fed (rate) hike will cause a recession.”

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