Mexican Peso Makes Gains Ahead of US Central Bank Announcement

After persistent underperformance against the US dollar, the Mexican peso returns to its normal exchange rate of MX$20.0150 for each dollar, per information by the Banco de Mexico. This marks an appreciation of MX$0.046 and a variation of 0.23 percent. This comes as investors anxiously wait for the US Central Bank to make a policy decision about a potential pullback in economic aid as inflation goes up.

According to averages from major Mexican banks, the US dollar has a purchase value of MX$19.75 and a selling rate of MX$20.21. On July 24, the Mexican currency remained below the 20-peso barrier it has been behind since June of last year when it reported an exchange rate of MX$20.67. Even so, this is still far below its pre-pandemic rate of MX$22.67, recorded in August 2020.

The Mexican Stock Exchange (BMV) closed weekly activity with increase of 0.06 percent in the Price and Quotation Index (IPC), its main criterion, after a week of great uncertainty that ended in incremental recovery. On Friday 23, it closed at 50.268.45 units with a gain of 27.94 points and a positive variation of 0.06 percent in comparison to the previous session. Banco Base analyst, Luis Alvaro, stressed that this was a modest gain, due in part because of a strong loss incurred in the US, the largest single-day drop in the year thus far.

Since most fixed exchange rates are pegged to the US dollar and quarterly reports are due soon there is reserved attention on the US Central Bank from business analysists who have been keeping a close eye on inflation. Now, there is mounting concern over the role the Delta variant will have on the market as countries all over the world report a serious rise in COVID -19 cases caused by this strain. Extrapolations and market projections pose to potentially influence volatile market movements depending on what they foresee, added Alvaro.