Peso falls back after touching its best level since March 2020, but closes week of earnings

The Mexican peso depreciated against the American dollar this Friday. The local currency fell back due to profit taking after having earlier touched its best level since March 2020, due to a wave of risk appetite at the end of the week.

The exchange rate ended the session at the level of 19.4920 units against an official close of 19.3634 units yesterday, with data from the Bank of Mexico (Banxico). The movement meant a loss of 12.86 cents for the peso, which is equivalent to 0.66 percent.

The pair traded in an open range between a high of 19.5919 units and a low of 19.2659 units, its best level since March 2020. Dollar Index (DXY), which measures the US currency with a basket of six references, fell 1.73% to 106.33 points.

Despite this setback, the peso managed to end the week with a gain of 2.71 cents or 0.14% against last week’s close of 19.5191 units. The index that measures the dollar lost 4.08% in the week in its worst period since March 2020.

The market remains encouraged by expectations of a moderation in interest rate hikes from the Federal Reserve (Fed) after US inflation data released yesterday. The momentum was also added to positive information from China.

China relaxed some of the strict sanitary measures included in its Covid-zero policy, such as reducing the quarantine time for travelers. The easing of some of the restrictions “provides some additional impetus,” Ve por Más analysts said.

jose.rivera@eleconomista.mx