FXStreet (Córdoba) – The Mexican peso is about to end the week with a gain of around 0.80% against the US dollar, after recovering sharply from record lows. USD/MXN reached on Thursday a new all-time high at 16.485 but then reversed and today bottomed at 16.00.
It started to rally after new measures from the central bank were announced and today by a weak US dollar. After finding support at 16.00, USD/MXN bounced to the upside and it was trading around 16.12/14. The peso was the best performer among the most traded currencies during the week.
Banxico on the defensive
Yesterday the Bank of Mexico, as expected, left rates unchanged and announced that the daily dollar auctions were rise from USD 52 mln to USD 200 mln and that extraordinary auctions will be now triggered with a depreciation of 1% instead of the previous 1.5% needed.
“While we were not surprised by the changes, the announcement was enough to start a short-covering rally for the peso, which earlier in the day had hit a new all-time low near 16.50. Given the negative EM (Emerging Markets) backdrop still in play, we think this short-covering bounce will soon run out of steam. It’s important to stress that the measures are really meant to provide extra liquidity in disorderly markets, and are not meant not to protect a level or to reverse the trend”, said Ilan Solot, EM Currency Strategist at Brown Brothers Harriman.
(Market News Provided by FXstreet)