Wednesday , June 16 2021

The peso is losing ground against the dollar in the face of falling oil



MEXICO CITY (APR) .- The pesos lost the country again against the dollar, driven by the decline in international oil prices. At the banks' branches, the green ticket was offered at 20.77 units; while at the interbank level was quoted at 20.42 pesos, which is 1.62% more expensive than late last Monday, according to the Bank of Mexico (Bankico) data.

This day the price of the mixture of West Texas Intermediate (WTI) dropped 6.71%, closing at $ 53.36 per barrel, losing nearly 30% of its peak in October, due to the perception of the market that the Organization's oil production decline of oil exporting countries (OPEC) will not be sufficient to avoid over-supply in the coming months.

In this context, the analysis of Base Bank explained that most of the currencies in the basket of major crosses of the dollar are closed with losses, especially those of the countries that produce raw materials and oil.

The Norwegian crown closed with a depreciation of 1.27%, the Canadian dollar lost 1.04%, and the Australian dollar lost 1.03%.

According to the analysis, the depreciation of the pesos in the first hours of the day is due to a combination of factors, "mainly the uncertainty about how decisions will be made in the next federal administration, which raises health issues the future of public finances."

"It should be noted that the Mexican peso managed to wipe out most of its losses, having found that Banquino's Deputy Governor Javier Guzman pointed out that it may be necessary to raise the reference rate in the short term," said Baza Bank.

The deputy Governor added that the balance of risks to inflation remains distorted and worsened, due to the depreciation of the peso, the possibility of upward shocks in energy prices, the possible wage pressures and the risk of "decoupling" of inflationary expectations.

This increases the probability that the Board of Directors will raise the interest rate on December 20 and for the time being contributes to the stability of the exchange rate.

While this is happening, capital market capital market rejection was back on Tuesday, where the IMF's MMC recorded a loss of 1.23% or 521.9 points, while the S & P 500 in the United States had a 1.82% retracement. .

"In subsequent sessions, the uncertainty about the future of trade relations between the United States and China could continue to negatively affect capital markets globally," the Bank said.


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