The peso closes the second quarter with a depreciation of 9.23%

The peso closed the second quarter with a depreciation of 9.23% or 1 peso and 68 cents, trading around 19.86 pesos for one dollar, showing an annualized volatility of 14.1% and a minimum of 17.94 and a maximum of 20.96. pesos for dollar. The depreciation of the peso during the quarter was due to an increase in speculative bets against the national currency of 83.5% according to the Chicago Futures Market (CME) statistics, which was due to: 1) the adjournment of the renegotiation of NAFTA, 2) risk aversion due to the hardening of US protectionist policies and the country's threats to the European Union and China, 3) the possibility that the Federal Reserve increases its rate of 4) the contagion of other currencies of emerging economies such as the Brazilian real and the South African rand and 5) the electoral process.

It is important to note that although the peso depreciated in the future of NAFTA, exchange rate performance was in the same direction and more pronounced than that observed in other years of the NAFTA. presidential elections. In the previous three presidential elections (2000, 2006 and 2012), the peso lost an average of 4.96% in the second quarter, compared with a depreciation of 9.23% in the quarter that ended.

depreciation of the peso taking into account the minimum and maximum exchange rate during the first half of the year. This depreciation was 10.74% in 2000, 10.51% in 2006 and 16.33% in 2012, compared with a depreciation of 16.84% this year, the exchange rate rising from 17.94 pesos to 20 , 96 pesos per dollar, which equates to an increase of 3 pesos and 2 cents. Taking this statistic into account, the size of the peso's fall was similar to that observed in 2012.

Comparing the month of June, larger differences are observed. In 2000, the peso depreciated by 3.4% against the dollar, while in 2006 the depreciation at the end of the month was only 0.06% and that is the same. in 2012 the peso recorded a recovery of 7.06%, which is why quarterly observations, during the course of June, exchange rate movements have not been consistent. During the month that ends, the peso posted a moderate appreciation of 0.26% or 5.2 cents, trading close to 19.86 pesos for one dollar.

If we compare the first half of the year, we find similar performances. In the semester that ends, the peso has shown a depreciation of 1.02% or 20 cents, while in the previous three presidential elections, the peso depreciated on average 1.99% during the first half of the year. However, this average is the result of two depreciations of 3.42% and 6.69% in 2000 and 2006 and a recovery of 4.13% in 2012. It should be noted that in In 2012, the peso posted a significant depreciation in April, May and the first half of June, followed by a downward correction in the second half of June.

In the last three presidential elections, the exchange rate showed consistent behavior during the month following the elections. weights averaging 2.82%. If we exclude July 2012, where the peso recovery concentrated in the second half of June 2012, the average increase in the peso rose to 4.1%, taking into account the years 2000 and 2006.

change of the night of this Sunday will depend on the election results. Confirmation of the leftist candidate's triumph could lead to an exchange rate of between 19.70 and 20.30 pesos for one dollar, with the possibility that the peso will appreciate gradually in July, as long as a Opposition to the legislature is confirmed and if post-election statistics from years ago are repeated. Otherwise, in the event of a majority in both houses of Congress, the exchange rate could exceed the level of 20.50 pesos for one dollar and come closer to 21 pesos for a dollar in the short term, because there would be an increase speculative bets against the peso

It is important to add that the first statement of the virtual president will also influence the exchange rate, as well as the information that will be disclosed over the next five months on the economic policy that the The new administration will follow, in particular, what relates to public finances and trade relations with the United States. It is not excluded that the exchange rate volatility will continue in the second half, a consequence of the protectionism of the Donald Trump administration, since the renegotiation of NAFTA has yet to be concluded and, at the same time time, the imposition of new tariffs between states. Unidos and its key partners pose a serious risk to global economic growth, a risk that is generally reflected first in the currencies of emerging economies such as the Mexican peso.

Similarly, the volatility of the Mexican peso should continue due to the contagion effect of the Brazilian real and the South African rand, the currencies that depreciated by 17.18% and 15.83% respectively. in the second quarter

On the last day of the week, the peso posted a depreciation of 0.72% or 14.2 cents, reaching a low of 19.5622 pesos and a maximum of 19.9783 pesos for one dollar [19659002] During the second quarter, the euro-peso It was a minimum of 22,0946 and a maximum of 24,4497 pesos per euro in interbank rates on sale. For its part, the euro touched a minimum of 1,1509 and a maximum of 1.2414 dollar for one euro

At closing, the interbank sale rates were 19.8595 pesos per dollar, $ 1.3193 for one pound and $ 1.1671 for one euro.

Gabriela Siller; PhD

Director of Economic-Financial Analysis

Banco BASE