Mexican Peso on the backfoot on fears of judiciary reform
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Mexican Peso down 0.29% amid risk aversion on weak China data and European political uncertainty. Banxico’s verbal intervention last week stabilized the Peso, central bank remains vigilant on currency volatility. Upcoming economic data from Mexico expected to show economic slowdown. The Mexican Peso traded with minuscule losses against the US Dollar on Monday and is down 0.29% as risk appetite deteriorates based on weak China data and political uncertainty in Europe. The emerging market currency would remain volatile as traders digest the incumbent judiciary reform in September, presented by current President Andres Manuel Lopez Obrador and approved by upcoming President Claudia Sheinbaum. The USD/MXN trades at 18.51, gaining 0.34% The Mexican currency stabilized last week after verbal intervention by Bank of Mexico (Banxico) Governor Victoria Rodriguez Ceja last Wednesday, who said the central bank is attentive to volatility in the Mexican currency exchange rate and could act to restore “order” in markets. Last week, Claudia Sheinbaum tried to calm investors and told them not to be concerned about the reforms. She said, “Mexico’s economy is healthy and strong, and [there is] nothing to worry about.” The economic docket in Mexico will feature the announcement of Aggregate Demand, Private Spending, Retail Sales, and Economic Activity data. The data is expected to show that the economy is slowing down due to higher interest rates set by Banxico at 11%, which are expected to be lowered in the June 27 meeting. Despite that, the USD/MXN exchange rate continues to be driven by political uncertainty about the changes to the Mexican Constitution that threaten the state of law. Across the border, the latest Federal Reserve (Fed) decision to keep rates unchanged and the projection of just one interest rate cut in 2024 cushioned the Greenback and boosted the USD/MXN to 14-month highs. The US…
Filed under: News - @ June 17, 2024 8:22 pm