The Mexican peso closed this Wednesday at its best level since June 27 after the disclosure of inflation figures in the United States, which were lower than expected by the consensus of analysts, and in a market that also has its sights set on the monetary policy notice of the Bank of Mexico (Banxico) this Thursday.
The peso appreciated 1.16% after it was announced that inflation in the United States slowed down during July to reach an exchange rate of 20.0331 pesos per dollar, according to Banxico data. During the day the Mexican currency was operating in a range of 19.9139 to 20.2829 units per dollar.
“After today’s inflation report in the United States, the dollar has weakened against the Mexican peso to reach 20.04 Mexican pesos per dollar in the first minutes after the report, inflation reported a fall to 8.5% from 9.1%, this weakens the dollar in the short term, since the Federal Reserve will take less aggressive measures in its next meeting and it is likely that we will begin to see a recovery in the market and in stock indices”, said Eduardo Ramos, analyst at ATFX.
He added that energy prices will continue to be scrutinized and the report on Cushing’s oil inventories is now awaited.
The Mexican currency was the seventh emerging currency with the highest appreciation against the dollar, only below the South African rand, with 2.21%; the Chilean peso, with 1.89%; the Colombian peso, with 1.79%; the Czech crown, with 1.56%; the Polish zloty, with 1.37%, and the Hungarian forint, with 1.32%.
Of the important data published in the United States, July inflation surprised, after registering a lower than forecast increase. On the other hand, consumer prices did not suffer a monthly variation in the seventh month of the year, with which the annual rate drops to 8.5%, from the previous 9.1% and the expected 8.7%. In addition, the core item, the one that excludes volatile goods such as energy and agriculture, also reported lower increases than estimated, with a monthly variation of 0.3% and 5.9% annually.
“Although this morning the exchange rate moves along with the rest of the market, in the next few hours the Mexican peso could show independent behavior, because the market is anticipating the Bank of Mexico’s monetary policy announcement this Thursday. at 1:00 p.m. The Government Board is expected to raise its interest rate by 75 basis points to 8.5%”, mentioned Gabriela Siller, director of economic analysis at Banco Base.
At the geopolitical level, tension between China and Taiwan continues to rise, triggered by the visit of the Speaker of the US House of Representatives Nancy Pelosi last Tuesday, with Taiwan initiating military maneuvers with live fire and its leaders claiming that the invasion of the island by China.