- Mexican peso rises sharply and erases daily losses, still down for the week against USD.
- USD/MXN holds above 20.00 with a bullish tone.
The Mexican peso rose sharply in a few minutes following comments from President-elect Andres Manuel Lopez Obrador regarding the banking sector. The USD/MXN pair pulled back from weekly highs above 20.30 to 20.08.
On Thursday, the Mexican stock exchange dropped almost 6% after Morena’s legislators (AMLO’s party) considered limiting banking fees. Recently AMLO said it won’t change make any fiscal or economic changes in the first three years of his administration that will start December 1. Those comments boosted the Mexican peso.
The currency was under pressure amid increasing concerns about AMLO’s plans following the cancellation of the current ongoing construction of the new airport. Since then, Lopez Obrador has been restoring confidence.
Negative week for MXN
Despite the recover, USD/MXN is about to end the week higher, posting the strongest weekly close since June. Among emerging market currencies, the peso was not the worst performer but the situation has change dramatically from weeks ago.
At the beginning of October, USD/MXN traded at 18.75 and started a sharp rally, rising back above 20.00. The depreciation of the Mexican peso increased expectations about another rate hike from the Bank of Mexico that will meet next week. Inflation slowdown modestly in October to 4.9% but still remains above the central bank’s target and uncertainties remain elevated.
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