- Mexican peso under pressure amid global risk aversion due to new variant of COVID.
- The USD / MXN retracement found support above 21.65, now approaching 22.00.
The USD/MXN it’s up 1.50% on Friday, adding to weekly gains. It peaked during the Asian session at 22.15, the highest level since September 2020, and then fell back to find support at 21.65. As of this writing, it’s hovering around 21.90 as the market sell-off continues.
Concerns sparked by the new variant of COVID-19 affect market sentiment. Equity markets fell in Europe and the United States, the Dow Jones fell 2.70% and the Nasdaq 1.95%.
Emerging market currencies are falling sharply. The worst performers are the Turkish lira (USD / TRY 4.45%), the South African rand (USD / ZAR 1.75%) and the Mexican peso.
The USD / MXN traded considerably higher during the week, not only driven by global developments but also by domestic factors. The change in the nomination for the next director of Banco de México caused the Mexican peso to drop earlier in the week.
The US dollar has risen almost 5% in the last five days against the Mexican peso; the biggest rebound since September last year. It is about to post the highest close in more than a year. The rally could continue if market conditions remain negative.