Home Feature Despite a weaker dollar, the peso fell sharply.

Despite a weaker dollar, the peso fell sharply.

by Yucatan Times
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This depreciation is associated with internal and external factors, but the most significant risk perception is local. The approval of electricity reform in the Chamber of Deputies and the IGAE data published today raises doubts about its economic recovery.

MEXICO CITY (FOREX) – The Mexican peso fell sharply against the dollar in Thursday’s trading. The exchange rate is at the level of 20.6670 units per dollar against the official closing of 20.4270 pesos yesterday from the Bank of Mexico (Banxico).

The movement in the quotation means for the local currency a loss of 24 cents or a variation of 1.18 percent. The currency cross moves between a high of 20.7560 pesos and a low of 20.3835 pesos.

Internal and external factors
The peso’s significant depreciation is associated with internal and external factors, but the most considerable risk perception is local. Emerging currencies are also influenced by the South African rand and are falling despite a weak dollar.

Locally, traders have been closely following Congress’s discussion of a controversial electricity reform bill that the Chamber approved of Deputies. It is expected to affect Mexico’s recovery.

Also, data released this morning from the Global Indicator of Economic Activity for December shows that the economic recovery stalled due to the pandemic’s effects.

Weak dollar
There has also been a strong upward movement in Treasury bond yields due to fears that the Federal Reserve’s monetary policy will put upward pressure on inflation. This factor plays against the dollar.

The Dollar Index (DXY), which measures the U.S. currency against a basket of six benchmark currencies, fell -0.49% to 89.74 units. Despite the dollar’s fall, the peso came close early to its worst level of the year.

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