The peso depreciated at the opening on Monday due to a global strengthening of the dollar, fueled by concerns that the Federal Reserve could maintain elevated interest rates for a longer period. The peso was trading at 16.6847 units, marking a 0.39% decline compared to Friday’s reference price. This marks the fifth consecutive day of losses for the peso, which had reached its best level since August 2015 last week.
According to Banco Base, the dollar’s strength is linked to expectations that the Federal Reserve will delay cutting interest rates, following the release of strong March retail sales data in the United States. Retail sales in the U.S. increased by 0.7% in March, surpassing analysts’ expectations of 0.3%, indicating a robust start to the first quarter for the world‘s largest economy.
In addition to economic factors, market attention is also focused on escalating tensions in the Middle East after Iran’s recent drone and missile attack on Israel. While the impact on markets has been limited so far, analysts warn that a negative market reaction cannot be ruled out in the event of a military response. Banco Base stated that in such a scenario, the exchange rate could face upward pressure towards 20 pesos per dollar.
Stay updated on business and current affairs by following Forbes Mexico, and for more news, follow our Showcase on Google News.