Bloomberg – The Mexican peso has fallen for the fourth consecutive session, once again lagging behind its Latin American peerswith the short-term support level at $21.50 per dollar still in sight.
The peso weakened 0.68% to 21.4577 Mexican pesos per dollar on Tuesday and accumulated a 3.7% drop in four days. The session low of $21.4650 is the weakest point since December 3.
The level of 21.50 pesos to the dollar, last seen in early December, is now acting as a major short-term support for the peso. Breaking the mentioned level could lead the currency to extend its losses towards the level of 22 peso to the dollar, last seen on November 26.
The Mexican currency remains more sensitive to changes in US asset prices than its Latin American counterparts. dada Positioned as a major oil producer But from just a small source, higher oil prices in general provide only a limited boost to the currency.
The peso has depreciated by 5% since February 23, before Russian forces attacked Ukraine. This contrasts sharply with a 39% rise in WTI over the same period.
The dollar/peso’s one-month implied volatility rose for a third day on Tuesday to 16.44%, the highest since March 2021.
Real money and regular money accounts have sold good amounts of the Mexican peso so far this week, according to a London-based trader.
Mexico’s TIIE interest rate swaps extended gains on Tuesday, in line with a weaker peso and higher US Treasury yields.
Now the curve discounts more than 260 basis points for rate hikes by the end of the year, with seven regular Bank of Mexico meetings scheduled. The interest rate increase is priced at 50 basis points this entire month.
Chikou Bank’s next rate hike is expected to be 50 basis points this month, according to the latest Citibanamex survey. It is estimated that the monetary policy rate at the end of the year will be 7.50%, which means an increase of 150 basis points.
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