Most Latin American currencies slipped and stock markets edged higher on Monday, February 20th, with market holidays in the United States and Brazil making for a quiet session.
The Mexican peso slipped 0.3% to 18.40 versus the US dollar after hitting a near five-year high of 18.32 in the previous session. Investors will focus on the minutes from the U.S. Federal Reserve and the Bank of Mexico’s February meeting this week for clues on the path of monetary policy tightening.
Recent economic data has highlighted strength in the U.S. economy but also persistent price pressures, raising worries among traders that the Fed will hike interest rates for longer and boosting the dollar.
However, the Mexican peso has held resilient after a stronger-than-expected 50 basis points rate hike by Banxico earlier this month suggested more rate hikes were on the cards.
The minutes of the February meeting are due on Thursday, February 24th.
“We expect Mexico’s central bank to continue hiking in the following meetings, with two more 25 bps hikes in March and May, taking the rate to a terminal level of 11.50%. Nevertheless, we believe risks to our forecast are tilted to the upside,” analysts at Banorte Research said in a recent note.
Mexico’s main IPC index edged 0.4% higher, along with those in Chile and Colombia.
Source: El Universal