Peso depreciates before bets of greater monetary tightening

The Mexican peso depreciates against American dollar Wednesday morning. The local currency lost ground due to a global strengthening of the dollar in the face of renewed concerns about further monetary tightening to combat the inflation.

The exchange rate spot is located at the level of 20.1211 units per dollar against the official closing record of 20.0542 units from yesterday Bank of Mexico (Banxico). That means a fall of 6.69 cents for the peso, equivalent to a variation of 0.33 percent.

The cross trades in an open range with a high of 20.1758 units (its highest level in three weeks) and a low of 20.0114 units. The Dollar Index (DXY), which measures the greenback against a basket of six reference currencies, rose 0.56% to 112.76 units.

“The US dollar resumes its advance after an inflation report in Europe that showed us that we are far from seeing ideal levels of inflation on a global scale. The peso loses ground on a day of auction of Treasury bonds,” explained in a report the signature ATFX.

Comments from senior members of the Federal Reserve have contributed to bets on higher rate hikes. Yesterday, Tuesday, the president of the Fed in Minneapolis, Neel Kashkari, affirmed that the key rate could rise above 4.75% if core inflation does not give way.

For now, investors’ attention is focused on news from the UK, after news that its inflation accelerated to a rate of 10.1% year-on-year in September, matching a 40-year high reached in July.

jose.rivera@eleconomista.mx