Title: Mexican Peso Opens August with Decline Against the Dollar Amidst Risk Aversion
Date: August 1, 2022
The Mexican peso started off the month with a fall against the dollar, driven by increased risk aversion in global financial markets. This decline comes after the release of unfavorable Purchasing Managers’ Index (PMI) indicators. According to Bloomberg data, the Mexican currency has depreciated by 0.64 percent, resulting in an exchange rate of 16.85 pesos per dollar, compared to the previous day’s closing rate of 16.74 units.
Analysts at CIBanco anticipate moderate losses for the Mexican peso throughout the day, as the market reacts to China’s manufacturing PMI data and the recent decision by the Reserve Bank of Australia. They suggest that, for the remainder of the day, the exchange rate may fluctuate between 16.74 and 16.90 pesos per dollar.
At present, banks in Mexico are quoting the dollar at 17.20 pesos for each US dollar, as reported by Citibanamex.
On a broader scale, the dollar seems to be gaining strength against a basket of six currencies from developed countries. The dollar index (dxy) has risen by 0.43 percent to reach 102.29 units, while the Bloomberg dollar index (bbdxy) stands at 1,223.90 points, with a 0.48 percent increase.
Among the currencies experiencing significant depreciation against the dollar, the Argentine peso is currently the most affected, declining by 1.64 percent. Other currencies that have depreciated more than 1 percent include the South African rand (1.64 percent), the New Zealand dollar (1.14 percent), the Swedish krona (1.08 percent), and the Hungarian forint and Norwegian krone (1.04 percent).
In terms of bond yields, Mexico’s 10-year Mbono is currently yielding 9.14 percent, whereas in the United States, the yield on the 10-year bond is at 4.03 percent.
It remains to be seen how these currency fluctuations and market dynamics will develop in the coming days as various geopolitical and economic factors continue to influence the global financial landscape.