Yesterday the interbank rate for the peso closed at its lowest level against the dollar in two years, with a value of 13.4950 pesos. According to information from México’s central bank, Banco de México, the drop in the value of the peso is due to positive financial data in the United States.
As of the close of business yesterday the peso had lost 3.09% of its value against the dollar so far this year.
Financial analysts say that in the short term the dollar’s strength against the peso and other currencies is attributable in part to the interest rate differential between the United States bonds, which yesterday offered a yield of 2.53% for 10 years compared to a rate of 0.97% for German bonds for the same time period. The interest rate differential of 1.56 percentage points is the highest in over 15 years.
Gabriela Siller, foreign exchange specialist with Banco Base S.A., said that by the end of the year the peso could be between 13.50 and 14.00 to the dollar. He said that at the beginning of the year the peso was projected to end 2014 at about 13.00 to the dollar.
Arturo Castro, CEO of the Center for Economic Analysis and Projections for México (CAPEM), said that if the peso stays at between 13.45 and 14.00 to the dollar, it would have an immediate impact on inflation. Arturo Castro said he thought the weakening peso was attributable to speculation that U.S. Federal Reserve would withdraw its economic stimulus in October, as well as speculation that U.S. interest rates would rise.
(from Milenio)
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