as a reflection of anti-Semitism inflation In the United States, the wholesale exchange rate settled at 20.46 pesos yesterday, its highest level in three months, which means a decrease of 51 cents (2.56%) compared to its close last Friday, which is the worst daily performance since September 23, 2020. .
For its part, dollars were sold at retail windows at banks for 20.92 pesos, up 47 cents (2.30%) from the previous close, according to data from CitiBanamex.
The foreign exchange market has been under pressure since last Friday, when inflation was reported in May United State It reached 8.6% annually, which is a new maximum in 40 years.
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Thus, the most relevant event this week for the markets, and especially for the exchange rate, will be the US Federal Reserve’s (Fed) announcement tomorrow of a rate hike, as well as the conference of its Chairman, Jerome Powell and updated inflation expectations.
Investors now expect the Federal Reserve to raise interest rates by 325 basis points in the remainder of the year, which would imply three hikes of 75 basis points and two of 50 basis points, said the director of economic analysis at basic financial groupGabriella Sealer.
“There has never been a strong peso, the dollar has been weak. Now that the market is expecting more from the Fed, it has caused all currencies to lose, including the Mexican peso.”
“Yes, there are elements to worry about, but there is an overreaction in the markets. The truth is that what came out of the inflation data last week in the US is that everyone is starting to speculate that inflation is still far from hitting the ceiling, so the Fed has to The Fed raised rates faster than it already told us.” . James Salazaran economic analyst at CI Banco.
The problem is that economic activity is affected, which could turn into a recession, and the market anticipates this possibility. The specialist added that this is causing a search for safer assets, or havens, which has resulted in the dollar in general strengthening against most currencies, including the Mexican peso.
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stock market shaking
Stock markets started the week with negative moves due to growing concerns about a more aggressive stance by the Federal Reserve in this week’s monetary policy decision, reviving recession fears.
In Asia, stock markets closed lower, also affected by the situation of Covid-19 in China, and in Tokyo, the Nikkei index fell 3.01%. In Europe, the London stock market fell 1.53%.
In the same vein, stock indexes in New York fell. The Dow Jones decreased 2.79%; Nasdaq fell 4.68%; While the S&P 500 fell 3.88%.
In Mexico, the IPC stood at 48,445.30 units, 0.05% below the level it closed last Friday.
In the opinion of financial professionals, volatility is likely to continue in the markets, but much will depend on the message the Fed sends on Wednesday.
The more pessimistic the investors are, the more they demand; However, the Fed in general does not fall in love with this game.
“It will probably be more difficult in terms of goals to control inflationbut not as much as the market is actually discounting.
“That’s what we think he’ll end up doing feed it In the short term, Salazar commented, it will end up helping reduce risk aversion episodes.
Both specialists agreed that it was possible for the exchange rate to return to levels of 20 pesos; However, they know that this week they can continue to be under pressure.
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