Mexico central bank seen hiking rate to support battered peso

06/30/16 Reuters

pesomexicanoMexico’s central bank is expected to raise its key lending rate on Thursday in a bid to support the peso, which has been battered by global markets, amid heightened concerns that currency weakness could hit inflation.

According to the median expectation of 21 analysts surveyed by Reuters, the Banco de Mexico is expected to raise its benchmark interest rate by 25 basis points to 4.00 percent.

In the past two sessions, the peso regained much of the ground lost after Britain’s shock vote to leave the European Union last week and as yields on Mexican interest rate swaps fell as investors cut bets on an aggressive half-percentage point hike by Mexico to prop up the currency.

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