The peso is leading emerging-market gains since policy makers unexpectedly raised interest rates, unveiled budget cuts and announced a new currency-intervention policy Feb. 17. The gain pushed returns on Mexico’s peso-denominated notes to 3.2 percent in dollar terms through Thursday Feb. 18, compared with a 0.1 percent average for developing nations’ debt.
Despite the currency’s rebound from a record low in the wake of the measures, Barclays’s Marco Oviedo predicts the rally will be short-lived as higher interest rates hurt a sluggish Mexican economy roiled by plunging oil prices. Morgan Stanley analysts led by Luis Arcentales say the recent moves “won’t change the direction” of the peso, which is still the worst-performing major currency this year after falling 6 percent through Thursday.
Ricardo Medina, a spokesman for the central bank, declined to comment on the impact of the measures. The peso slipped 0.1 percent Friday Feb. 19 to 18.3141 per dollar at 8:55 a.m. New York time, leaving it 3.3 percent stronger for the week.
In a coordinated announcement Wednesday, central bank Governor Agustin Carstens and Finance Minister Luis Videgaray said borrowing costs will increase 0.5 percentage point to 3.75 percent as they cited the risk that the currency’s depreciation would fuel inflation. Banco de Mexico also said it would replace a daily dollar-auction program with a plan to sell greenbacks directly to banks whenever needed to support the currency.
more recommended stories
American family who died in Mexico ‘went to sleep and never woke up,’ cousin says
The four members of an Iowa family who.
Criminals break into schools in Acapulco, steal and cut victims’ hair
On Tuesday March 20, four men broke.
Infrastructure, the big challenge for the next state administration in Yucatán
“The next state government of Yucatan.
Iowa family found dead in Tulum Hotel
The Creston Police Department told WHO-TV that four.
Undocumented Single Mother Faces Deportation in Four Days: Montrealers Outraged at Failure of Sanctuary City
Montreal, March 23 2018 — Montrealers.
Campeche and Yucatán present at Expo ANTAD 2018
Exhibitors that participated in Expo ANTAD.
Mexican women mobilize against sexist violence
In hat and police suit, with.
Hubikú Ecopark: nature, gastronomy and Maya tradition in one place
Located in the municipality of Temozón,.
US State Department removes restrictions for Playa del Carmen
The US State Department through their.
Canadian WestJet launches new Mexico City direct flights
Canadian carrier WestJet is now offering.