In the midst of financial volatility, those who bet on the peso in the first quarter of the year are about to make a significant exchange gain; in fact, the best of the current six-year term.
Despite the fact that the peso has been characterized by its strength in the present administration, a lot depends on the period that is analyzed, because in fact, the variations do not always benefit investors.
But, if we measure what has happened up to March 23 of each year starting in 2020this period is the most important in foreign exchange gains (difference between the initial exchange rate and the final exchange rate of a period).
When referring to foreign exchange gains, of course we are talking about the strength of the peso; that is Those who bought pesos and sold dollars at this time are more convenient, because now they will have to disburse fewer pesos to buy back those dollars that they sold at the beginning of the year.
According to the figuresat this moment there is an exchange gain of 4.83 percent for investors who bet on the pesothe highest recorded in these 4 years and higher than the 1.30 percent reported a year earlier.
In the years 2021 and 2020, an exchange loss was registered; in the first case the rate was 4.83 percent and for the second case it was 23.5 percent, meaning that those who bet on the peso lost out.
Why does the foreign exchange gain matter?
The exchange gain is relevant for investments in the Mexican market because, although it is an unknown concept at the beginning of the investments, in fact, it is not known whether or not there will be an exchange gain, becomes a stimulus for investors and a driving factor for national markets. It’s like a kind of additional magnet in the Mexican market.
The foreign exchange gain is added to the nominal return of the money market, since a large percentage of investors who involve the exchange rate in their operations end up in the fixed income or variable income market, catapulting the benefits.
For example, at this moment, if an investor receives a nominal rate of Cetes, that is, around 10 percent, he can add his exchange gain if he had it, so that his benefit would be around 14 percent.
If we consider that annual inflation is already around 7 percent, we are talking about the fact that the real rate of the investor in question is most likely 7 percent, a benefit that is not obtained in any market, with a really low risk compared to other.
Regarding the real and nominal rate in the equity markets, It depends a lot on the performance obtained with the variations in your investment portfolio..
Foreign exchange gain could be maintained in the second quarter
The current exchange gain could be maintained or deepened in the second quarter of the year, if current conditions continue.
The following week it is very likely that Banxico will increase its reference rate to 11.25 percentmaintaining a differential of at least 6 base points with respect to US rates and a real rate of approximately 7 percent, something that could even appreciate the Mexican peso more in the coming months or weeks.
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