The Mexican currency closed this Monday its second day of appreciation against the dollar due to a lower perception of risk due to the Federal Reserve’s monetary policy decision, which will be published on Thursday, July 28, for which the operators are already discounting an increase of 100 basis points.
According to data from the Bank of Mexico (Banxico), the peso ended at 20.4706 units per dollar, an appreciation of 0.62% compared to Friday. The exchange rate operating range was a minimum of 20.3305 and a maximum of 20.5605 units per dollar.
The Mexican currency benefited from a general decline in the dollar as investors reduced bets on the aggressiveness with which the Federal Reserve will tighten its monetary policy in its meeting at the end of the month, CI Banco analysts said.
According to specialists, operators are beginning to opt for the possibility of an increase of 75 basis points, and not the 100 basis points with which they speculated after knowing the inflation figure in the United States last week, which was 9.1 %, the highest in 40 years.
So far this year, the emerging market currencies that gain ground against the dollar are the Russian ruble, with 28.92%; the Peruvian sol, with 2.85%; Brazilian real, with 2.74% and the Mexican peso with 0.18%. On the other hand, the Turkish lira depreciates 23.81%; the Argentine peso, with 20.29%; the Hungarian forint, with 18.15% and the Polish zloty, with 14.71%.
“The currencies of emerging countries recover for the second day in a row, due to a global improvement in investors’ appetite for risk. U.S. equity gains and higher commodity prices offer relief to riskier currencies, including the Mexican peso,” analysts at OctaFX said.
According to analysts, a consolidation below 20.45 units per dollar could contain further gains. However, a level below 20.22 units could change the short-term outlook to ‘neutral’.
The dollar index showed a decrease of 0.58% compared to Friday’s close, standing at 107,287 points.
Eduardo Ramos, financial markets analyst at ATFX Latin America, indicated that a weak dollar has been observed due to fears about the economic recession and the issue of interest rate hikes, after on Friday two members of the Fed mentioned that they a rise of more than 75 basis points due to employment data and the inflation issue.
“Investors are going to be looking for where to direct their capital. So these data, which can cause the peso, prior to the Fed meeting, to be slightly strengthened”, added Ramos.
