The Mexican peso was heading toward a three-year high versus the dollar on Tuesday, and other Latin American currencies also rose as investors assessed weak U.S. economic data that could push the Federal Reserve to switch to smaller rate hikes.
The peso, among the top-performing EM currencies so far this year, rose 0.5% to 18.68 per dollar – its strongest level since February 2020. Bank of Mexico board member Jonathan Heath said he did not see any interest rate cuts happening in the next six months, in an interview with Bloomberg published Monday.
“Several metrics such as the real effective exchange rate are beginning to suggest that the Mexican peso is becoming relatively expensive,” said analysts at Scotiabank. “We believe that an exchange rate move could be the catalyst for a rebound in investment as global bargain hunters swoop in.”
Broadly, stock markets and currencies in resource-rich Latin America rose as prices of commodities including oil and copper rallied on hopes that a shift in China’s COVID-19 policy will boost consumption.
Source: El Financiero
Mexico Daily Post