The Mexican peso appreciated 0.37 percent against the US dollar on Friday, 13 November, closing at 18.55 pesos per dollar. That was 6 centavos stronger than Thursday’s close, after US producer price inflation came in slightly below market expectations.
The peso has given back ground recently. It has fallen almost 9 percent since reaching a two-year high in early September, making it the second-worst performer among 31 major currencies tracked by Bloomberg.
Rate expectations weigh on the currency
Gabriela Siller, director of economic analysis at Banco Base, said the market still expects a Federal Reserve rate hike in December. She said that expectation would pressure the peso through the interest rate differential, even with Friday’s gain.
Banxico cut its benchmark rate by a quarter percentage point last week, surprising economists who had expected no change. The peso’s decline accelerated after Banxico officials said that month they were open to reducing borrowing costs.
Speculation over the central bank’s intentions
Some market operators now suspect the central bank’s board wants a weaker peso. A stronger currency has threatened exports and tourism.
By Banamex’s quotes, the dollar sold at 19.02 pesos and bought at 17.95 pesos. The US 10-year yield stood at 5.16 percent, while Mexico’s 10-year yield was 9.27 percent.
Related: Mexican peso slides after Banxico's surprise rate cut · Mexican peso gains 3.46 centavos against the dollar
Source: Bank of Mexico
