The strength that the peso weakened showed in the week ending March 10. The currency ended at 18.5103 units per dollar, a level that led it to its biggest weekly drop since November 2021, and its lowest price since January 24, 2018.
The exchange rate is less than 3% against the dollar, between March 6 and 10; it only lost 2.27% or 41 cents on Friday, its worst day since June 13, 2022, when it fell 2.49 percent.
Analysts attribute the weight loss to both external and internal factors, after months of showing resilience in a depressed market.
Last week’s depreciation of the peso was “due to a rebound effect after the exchange rate reached a new low for the year of 17.89 pesos per dollar,” said Gabriela Siller, director of analysis at Banco Base.
“Inflation in Mexico of 7.62% was also published, below the expectations of analysts, which creates speculation that the Banco de México (Banxico) could no longer be so aggressive with this increase in interest rates and with the possibility of reducing the spread between interest rates. with the United States”. He added expertise in foreign markets.
For Alejandro Padilla, general director of economic and economic analysis at Banorte, the correction of the peso during the week “is mainly due to technical factors and the closing of speculative positions”.
Gabriela Siller also said that the currency of Mexico was weakened due to the speculation that the restrictive monetary policy of the federal reserves will continue, after the appearance of Jerome Powell, on Tuesday and Wednesday of next week before the US congress.
One factor that contributed to the bad week was the increased risk aversion for the peso in the global financial market after the collapse of Silicon Valley Bank (SVB Financial Group) in the United States. This situation caused fear that a systemic risk in the US banking system, reminiscent of the 2009 financial crisis, could be triggered.
Regarding internal issues, Gabriela Siller said that the comments made by the President of Mexico, Andrés Manuel López Obrador, about the proposal of the US Congress to send the army to Mexico to fight organized crime, also dissolved the Mexican currency.
The reason is that they have brought fear about the development of the Mexican economy because a good part of the economic growth of Mexico is driven by exports to the United States and this kind of comment can generate political tensions between the two countries.
he will pay the most
Last week, the peso was the weakest currency against the dollar among the broad crosses of the main basket. It was followed by the Australian dollar, with 2.92%; the Norwegian krone, with 2.37%; Swedish Krona, 2.33%; won in South Korea, 1.83%; and the Canadian Dollar with 1.73 percent.
For its part, the Swiss franc was the strongest currency last week. with a gain of 1.57% against the dollar, followed by the Colombian peso which had an appreciation of 1.46 percent. Care is estimated at 0.06% and the reduced threat is 0.09 percent.
Alejandro Padilla recalled from last year, the exchange rate of the absolute and relative strengths between peers. In this 2023, the peso accumulates an appreciation of 5.12% or 99.86 cents against the currency of the United States, it is located only after the Chilean peso (+6.8%).
“We believe that the main driver of the Mexican currency has been a very attractive carry against other emerging currencies. Also, the market has incorporated a scenario with higher rates and a greater differential with respect to H,” said the executive.
He explained that this week, the attention of the exchange market will be on the growth of the data of the United States and the Eurozone. In the event of a slowdown in reporting less than expected, the dollar’s strength and volatility among other currencies will increase.
Denying that sense
Although the negative opinion of the speculators about the course of the Mexican peso remained on the Chicago Futures Market (CME), it fell in comparison with the data of the previous weeks.
Net speculative positions betting on peso declines were 36,873 contracts, a figure 7,405 lower than the last record.
These data correspond to the report from February 8 to 21 and have suffered two weeks due to a “cybernetic incident” passed by the CME provider, for which it is expected that regular data will be available until the middle of this month.
Thus, they added nine consecutive weeks of registered short net speculative positions against the Mexican peso futures in the Chicago market.
