The Mexican currency advanced slightly in yesterday’s session, still resisting levels below 20 units per dollar; External factors have helped the currency maintain this trade, analysts explained.
On the first day of the week, the exchange rate ended the session at 19.8848 units per dollar, according to official figures from the Bank of Mexico, reflecting a marginal advance of 0.01% compared to the previous day, when it ended at 19.8875 pesos per dollar. With this, he linked three days below 20 pesos per greenback.
During the session the peso reached its best level in almost five weeks due to a weakening of the dollar.
With the close on Monday, the local currency is at levels reached on April 18 when it was quoted at 19.8802 pesos per greenback.
The speculative net positions of the peso in the Chicago Mercantile Exchange (CME) have had a positive month, since so far in May the contracts in favor of the currency have increased 40.30%, from 20,100 to 28,200.
“The peso is reacting in a normal way to external conditions because normally when there is a cycle of rising interest rates, international investors rearrange their portfolios and leave emerging economies a little, they buy dollars. But now it’s different because the United States has a scandalous negative real rate (with inflation of 8.3% and interest rates of 0.75% and 1%) and this is playing in favor of the peso and emerging currencies temporarily,” he said. Jorge Gordillo, Director of Economic and Stock Market Analysis at CIBanco.
He added that this makes investments from emerging countries attractive because “there are no returns.” Stock markets are adjusting for the rise in global inflation. “Instruments in dollars and euros do not attract because of negative real rates, so some opportunities are shown in currencies of emerging countries.”
Emerging are appreciated
The CIBanco specialist said that the “dollar is depreciating” against the peso and also against emerging currencies, although it is appreciating against strong currencies, such as the euro, however, he estimated that this trend is temporary.
During May, the Brazilian real appreciated 3.35% and in the year 13.74%, while in the same period the Chilean peso gained 2.50% and 2.13 percent. The Colombian peso appreciates 0.61 and 2.17 percent. For its part, the ruble has a monthly appreciation of 17.91% and 21.73% in 2022, being the currency that earns the most against the dollar.
The Dollar Index, which measures the US currency against a basket of six major currencies including the euro, yen, sterling and Swiss franc, lost 1.03% to 102.09 on Monday. In May it has lost 0.84%, although so far in 2022 it has increased by 6.38 percent.
“From a technical point of view, the space for the appreciation of the peso against the dollar is limited. If the support of 19.80 pesos per dollar is broken, it is likely that the exchange rate will face difficulty in being below 19.75 pesos in a sustained manner”, said Gabriela Siller, director of Economic Analysis at Banco Base.
Due to the above, “the current levels should be considered as attractive for the purchase of dollars and the taking of foreign exchange coverage”, considered the specialist.
Regarding how long the exchange rate can resist below 20 units per dollar, Jorge Gordillo explained that when the differentials between rates and inflation begin to adjust, it could break this level.