Mexico: Central bank rises rates to 7.75%, MXN extends gains

Bank of Mexico rises rates to 7.75% as expected after 2 months of MXN depreciation.
USD/MXN extends bearish correction after the decision, heads for the lowest close since June 4.

As most expected, the Bank of Mexico rose the key interest rate by 25bp from 7.5% to 7.75%, the highest level since 2009. The decision was unanimous.

Banxico warned that if necessary would adjust the monetary policy in a timely and firm manner to reach the 3% inflation target and in order to keep inflation expectations anchored.

Regarding the “trade war”, the central bank expects a limited impact from the tariffs between the US and Mexico.

USD/MXN gains momentum after rate hike

The Mexican peso lost 15% from mid-April to mid-June against the US Dollar amid tensions across emerging market. The quick and sharp depreciation of the peso is seen as the main reason for today’s actions.

USD/MXN peaked last week slightly below 21.00 and since then it has been moving with a bearish bias. Today is falling for the fifth-day in-a-row and after Banxico’s statement printed a fresh 2-week low at 20.23.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.