Economics
USD/MXN Rises As Mexican Central Bank Cuts Interest Rates Again
The Mexican peso is struggling to find support against several major currency rivals after the central bank cut interest rates for the 11th consecutive month. The Mexican economy has been slumping as the country fails to contain the coronavirus pandemic, with the number of new infections rising thousands per day. Despite the peso making gains this past summer, it has been one of the worst-performing Latin American currencies this year. […]

The Mexican peso is struggling to find support against several major currency rivals after the central bank cut interest rates for the 11th consecutive month. The Mexican economy has been slumping as the country fails to contain the coronavirus pandemic, with the number of new infections rising thousands per day. Despite the peso making gains this past summer, it has been one of the worst-performing Latin American currencies this year.
On Thursday, the central bank slashed its benchmark rate by 25 basis points to 4.25% during the September policy meeting. Policymakers have been easing monetary policy every month since August 2019, bringing borrowing costs to their lowest levels since August 2016.
But officials will have a hard time trying to rein in inflation as it spurs economic growth. The annualized inflation rate surged from 3.62% in July to 4.05% in August, remaining well above the 3% target rate. The mid-month inflation rate for September jumped 0.16%, higher than the expectation of 0.12%. The mid-month core inflation rate also picked up 0.17%.
The central bank alluded to uncertainty and downside risks in the broader economy, noting that there is very little room for maneuvering. Leaders were, however, pleased by improving data in June and July.
Taking into account the referred risks for inflation, economic activity and financial markets, major challenges arise for monetary policy and for the economy in general.
Mexico fell into a recession last year, and analysts forecast the gross domestic product (GDP) will crash by up to 10.5% this year.
On the data front, economic activity advanced 5.7% in July, coming in better than the median estimate of 5.2%. This is down from the 8.8% jump in June. Economic activity has plunged 9.8% year-over-year.
Earlier this week, it was reported that retail sales rose 5.5% in July, slightly worse than the market forecast of 5.7%. This is down from the 7.8% boost in the previous month. Retail sales have also plummeted at an annualized rate of 12.5%.
Mexico has experienced more than 715,000 confirmed cases of COVID-19, with a death toll of about 75,000.
The USD/MXN currency pair surged 1.1% to 22.3997, from an opening of 22.1547, at 17:23 GMT on Friday. The EUR/MXN advanced 0.7% to 26.0346, from an opening of 25.8577.
© AndrewMoran for Forex News, 2020. |
Permalink |
No comment |
Add to
del.icio.us
Post tags: Coronavirus, EUR/MXN, GDP, Inflation, Interest Rates, Mexico, Peso, Retail Sales, USD/MXN
Feed enhanced by Better Feed from Ozh

The Biggest Threat To The Broad January Rally Is On The Table
In his Daily Market Notes report to investors, Louis Navellier wrote: Threat To The January Rally The Fed day has arrived; a 25 bps increase is expected…
You Think the Global Economy Is Brightening? Beware: The Big Hit Is Yet to Come
Relief is spreading among economic analysts and stock market experts. Energy prices are decreasing noticeably. The energy supply this winter seems secure;…
Schiff: Is The Fed Easing Up On The Inflation Fight?
Schiff: Is The Fed Easing Up On The Inflation Fight?
Via SchiffGold.com,
Is the Federal Reserve easing off the accelerator on its inflation…
-
Base Metals13 hours ago
St George looks to become a ‘dominant player’ in Mt Ida lithium belt with Woolgangie acquisition
-
Uncategorized14 hours ago
Greentech picks up new base metals prospect south of Whundo
-
Energy & Critical Metals12 hours ago
Grain Oriented Electrical SteeI: India Steps on the Gas Pedal
-
Economics15 hours ago
Analyzing the Labor Market Versus the Stock Market
-
Financing News17 hours ago
Newmont Corporation Files Early Warning Report
-
Uncategorized19 hours ago
Guy on Rocks: How did Guy’s ASX stocks picks perform in 2022?
-
Companies5 hours ago
TASEKO EXTENDS TERM OF UNDRAWN REVOLVING CREDIT FACILITY AND PROVIDES UPDATE ON HEDGING PROGRAM
-
Companies7 hours ago
Osino Announces Progress on Definitive Feasibility Study For Twin Hills Gold Project, Namibia