The Mexican peso went on a roller coaster, after Israeli missiles hit the territory of Iran early this Friday.
The hands marked around 7 p.m., Mexico City time, when the national currency began to rapidly depreciate against the dollar, as soon as the first reports from agencies regarding tensions between Israel and Iran became known.
The Mexican currency went through levels of 17.30 per dollar, 17.60 units, 17.80 units, until reaching 18 units per dollar for a few seconds, and returned to levels of 17.50 pesos per dollar.
The Mexican peso, one of the most traded currencies in emerging economies because it is possible to buy or sell pesos 24 hours a day, 365 days a year, suffered the strong risk aversion of investors, who began to take refuge in safer markets, such as the dollar, the Japanese yen or the Swiss franc.
And in the interbank (wholesale) market, the Mexican peso closed in the Mexican market at 17.0566 units per dollar.
Over the weekend, Iran launched hundreds of drones and missiles in a retaliatory attack following a bombing of its embassy in Syria. Most of the drones and missiles were shot down before reaching Israeli territory.
The national currency has a free floating regime — which varies due to its supply and demand in the international currency market — so risk aversion skyrockets.
Since the Mexican peso is one of the most liquid currencies among emerging markets and the Asian markets were already operating, investors undid positions in risky assets, fearing that geopolitical conflicts would continue to escalate.
Analysts considered, on social network X, that the peso does not like war.
Given the levels that the exchange rate has reached, it is expected to remain at levels above 17.40 at the opening of the American markets this Friday. But this behavior was a clear example of how a wave of nervousness can lead risk assets, such as the peso, to depreciate rapidly.
Meanwhile, Iran activated its air defenses in “several provinces” this Friday after “loud explosions” were heard in the center of the country.
Meanwhile, higher interest rates for longer continued to rumble through the markets. Waiting for new announcements and new reactions to geopolitical events, the dollar took flight.
In the midst of more and more voices joining the rhetoric of not lowering rates until they see strong signs that inflation subsides, investors remain very cautious.
The dollar index, which measures the behavior of the US currency against a basket of six international currencies, appreciates at 106,125 units, levels not seen since October 2023.
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– 2024-04-23 07:03:07
