The Mexican currency depreciated 4.06% the week that just ended, trading at 21.8335 pesos per dollar last Friday, which benefited investors in the International Quotation System (SIC) of the Mexican Stock Exchange (BMV), boosting the returns of foreign companies listed in this market.
However, the depreciation of the peso stopped at the opening of the electronic market this Sunday, as it stood at 21.6960 pesos per dollar at 8:00 p.m. Mexico City time, an appreciation of 0.63% or 13.75 cents compared to at the close of Friday.
At the same time, Wall Street index futures began trading higher, with the Dow Jones industrial mini advancing 0.49% to 35,029.0 points, the NASDAQ mini technology rising 0.54% to 16,138.0 units and the S&P 500 mini gaining 0.59% to 4,623.0 points.
The depreciation of the peso the previous week was mainly caused by the increase in infections and the development of the Omicron variant of Covid-19, which was declared by the World Health Organization (WHO) as a worrying variant, and has generated new closures in European countries, in such a way that investors bet on safe haven assets such as the dollar, which increased the price of companies in the SIC.
“The new variant of the coronavirus raises the risk that measures similar to those of the second quarter of 2020 will be implemented, with negative consequences for global economic activity,” Gabriela Siller, director of Economic Analysis at Banco Base, wrote in a report.
Janneth Quiroz Zamora, Deputy Director of Analysis at Monex, said that “the demand for safe haven assets increased significantly overnight from Thursday to Friday, with the yield on government bonds falling, on the news of a new strain of Covid- 19. This adds to the concerns about the global economic recovery in the face of the possibility that it is necessary to reimpose health measures that restrict mobility ”.
Double gain
Due to the depreciation of the peso, the issuers listed on the SIC had an increase in their prices, in such a way that investors took advantage of the moment to participate in the foreign market of the BMV.
Only last Friday, the SIC registered operations for 18,744 million pesos, while the local market only 9,580 million. The extraordinary gain of the issuers in the SIC is exemplified when a share that generally has a price of 100 dollars in the United States, would go to 2,082.21 pesos on Friday, November 19 and assuming that the share was stable at 100 dollars, the depreciation of the peso would take it to 2,183.35 pesos on Friday, November 26.
If the same stock would have increased 5% in the week, it would add to the depreciation, having a price of 2,292.52 pesos.
Among the main gains in the SIC is the American biotech Moderna with 31.95% yield. Also the Novavax laboratory with a 19.90% increase and the Brazilian oil company Petrobras with a 12.98 percent gain. Pfizer was another of the big winners of the week with 11.85% increase and the oil company Chevron with 8.10% yield.
Behind the Turkish lira
Peso, the second most depreciated currency
The Mexican currency ended the week as the second most depreciated currency against the dollar, only behind the Turkish lira, due to risk aversion among investors in the market in the face of the Omicron variant of Covid-19.
The peso-dollar exchange rate went from 20.8221 units per greenback on Friday, November 19, to 21.8335 pesos per dollar last Friday, this is a depreciation of 4.06% in the week.
The peso accumulated seven sessions of depreciation, losing 1.16 pesos or 5.51% in said period, as well as a loss against the dollar of 9.44% so far in 2021.
The Turkish lira ended the week with a fall of 12.63% to 12.4233 units per dollar, after the declarations of President Recep Tayyip Erdoğan to lower the interest rate despite the increase in inflation in that country.
The South African rand depreciated 4.32% to 16.2417 units per dollar, while the Russian ruble lost 2.71% against the dollar and the Brazilian real depreciated 0.99% in the week.
Gabriela Siller, director of Economic Analysis at Banco Base, wrote that “the dollar strengthened in the first days of the week after the nomination of Jerome Powell for a second term at the head of the Federal Reserve. The decision gave certainty to the market, but it was speculated that the Fed could accelerate the pace at which it will withdraw its monetary stimulus ”.
There is an increase in global risk aversion from the new variant of the coronavirus, he added. “Several countries of the European Union have already announced travel restrictions to Africa, mainly South Africa, where the variant was identified. Additionally, cases have already been confirmed in Hong Kong, Israel and Belgium ”.
Resistance was marked by the British pound which gained 0.94% against the dollar at $ 1.33 per pound, followed by the Japanese yen with a gain of 0.39 percent.
Reference-www.eleconomista.com.mx