Mexican CB Raises Rates by 50 BPS to 6.25%

Mexico is pulling out all the stops to shield itself from President Trump’s looming policies.
The country’s central bank raised interest rates Thursday for the third time since the U.S. election in an effort to save Mexico’s currency, the peso, which is near an all-time low. It raised rates by 0.5%.

Mexican leaders are very worried about all of Trump’s threats — a potential 20% tax on Mexican imports, a wall on the border, and renegotiating a trade deal.



In the big picture, Mexico’s leaders want — as best they can — to ease Trump’s impact on their economy and the peso’s diminishing value.

On Thursday, the peso did jump up a bit after the announcement. However, Trump has largely dictated its fate of late. The currency is down 10% since Trump’s election victory.
“The peso movement has mostly been a reaction to Trump” says Rodrigo Aguilera, an economist at the Economist Intelligence Unit. “Mexico hasn’t really had a huge influence in how the peso has behaved.”

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza