The peso closed the week with an appreciation of 2.54% against the dollar, its biggest weekly gain since August 2022, supported by signs from the Federal Reserve (Fed) that it will be more cautious in raising the rate.
From March 17 to 24, the peso was the third biggest gainer against the dollar, behind only the Hungarian forint and the Israeli shekel.
On Friday, the peso appreciated 0.87% against the dollar on Friday, closing at 18.4514 units per greenback, according to data from the Bank of Mexico (Banxico).
The appreciation of the peso was the result of the general weakening of the dollar, whose index fell 0.76% against a basket of six currencies. The Dollar Index already has two consecutive weeks of falls and accumulates a setback of 1.31 percent.
“During the week, the dollar weakened due to the expectation that the Federal Reserve will be cautious to carry out another increase in interest rates,” wrote Gabriela Siller, director of Analysis at Banco Base.
Among the main dollar crosses, the Hungarian forint topped the appreciation table (4.28%), followed by the Israeli shekel (2.57%).
The peso was in third place and the Chilean peso was in fourth place (2.37%).
Last Wednesday, the Fed raised its rate by 25 basis points, despite market bets for a pause in the bullish cycle after the turmoil in the financial system due to the bankruptcy of two regional banks in less than a week.
Moments after the decision and the signals that the Fed gave in the sense that it will be more cautious in its next meetings, the exchange rate appreciated up to 1.26% until reaching a minimum in the week of 18.3780 units.
Carlos Kretschmer, director of Financial Markets at Intercam Casa de Bolsa, explained that next week the performance of the peso will depend on the decision made on Thursday by the Bank of Mexico (Banxico). If the central bank decides to replicate the Fed’s move, it will maintain the rate differential of more than 600 basis points between Mexico and the United States, one of the main factors explaining the strength of the peso since last year.
So far in 2023, the peso has gained 5.42% and is the most appreciated currency against the dollar.
Second week in favor of the weight
Last week it closed with 51,530 contracts in favor of the peso in the futures market of the Chicago Mercantile Exchange (CME), which translates into a decrease of 22% or 14,597 units compared to the previous data of 66,100 positive or net long contracts.
In gross terms, the positions waiting for the appreciation of the peso reported a fall of 45,506 units, while the bets waiting for the depreciation of the peso decreased by 30,909 contracts.
Currently the CME data is already up to date, after the hack suffered by the Chicago Stock Exchange during the month of February, which resulted in several delays in the publication of its weekly reports. Before the publication of these data, the Chicago futures market was spinning 9 weeks against the peso, a period that began in the last week of December.
