The Mexican peso depreciated against American dollar this Tuesday. The local currency lost ground against a strengthening dollar, in a market fearful of the economic impact of strict confinement measures in China.
China is experiencing a rebound in cases of Covid-19 and has put strict lockdowns in place in an attempt to preserve its zero Covid policy. Markets are reacting cautiously to the possibility of this affecting the Chinese economy.
The exchange rate closed the session at the level of 20.3639 units against the close of 20.2032 units yesterday, with data from the Bank of Mexico (Banxico). That is a loss for the peso of 16.07 cents, which is equivalent to 0.8 percent.
The cross traded in an open range between a high of 20.4550 units and a low of 20.1917 units. The Dollar Index (DXY), which measures the greenback against a basket of six currencies, was up 0.57% at 102.33 points at the close.
With a maximum of 102.34 units on this day, the dollar index reached a ceiling this Tuesday not seen since March 23, 2020 (a little over a year ago), when it marked a record high of 102.98 units.
The International Monetary Fund (IMF) assured that the prospects of tightening financial conditions due to the war in Europe and an aggressive Federal Reserve, as well as the situation in China, are great risks.
“The strict confinement measures in China, and the increase in coronavirus cases in large cities such as Beijing, are weighing on expectations for economic growth and investment sentiment,” CI Banco explained.