Mexico’s peso weakens after Trump says he may kill NAFTA

08/23/2017 Reuters

pesomexicanoMEXICO CITY (Reuters) – Mexico’s peso weakened more than 1 percent in early trading on Wednesday, reacting to U.S. President Donald Trump’s comments casting doubt on the future of the North American Free Trade Agreement (NAFTA).

Initial talks to re-negotiate the trade pact between Mexico, the United States and Canada ended in Washington this weekend with no sign of a breakthrough, and further discussions are due in Mexico City in September.

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Mexico seen ending hiking cycle on bet inflation near peak

8/10/2017 Reuters

pesoAfter a string of interest rate hikes, Mexico’s central bank is expected to hold borrowing costs steady on Thursday on signs that a spike in consumer prices is close to peaking and following a recovery in the peso currency.

The Banco de Mexico is expected to leave unchanged its benchmark rate 7.00 percent in its 1 p.m. [1800 GMT] announcement, according to 18 analysts surveyed by Reuters.

The central bank hiked rates in its previous seven meetings, taking the rate to a more than eight-year high.

One member of the board voted to hold rates at the last meeting, and analysts expect the bank will now signal a pause after raising its main rate by 400 basis points since the end of 2015 to counter repeated slumps in the peso.

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Exclusive: High rates help Mexico weather NAFTA talks, premature to talk of cuts – Carstens

07/13/2017 Reuters

Agustin_Carstens
Carstens

MEXICO CITY (Reuters) – Mexico’s central bank could pause monetary policy tightening for some time, its governor said on Thursday, but he defended high interest rates at a time of political volatility and knocked down speculation there will be rate cuts before mid-2018.

Banco de Mexico Governor Agustin Carstens said talk among private economists that rates would be reduced early next year diverged from the bank’s view, which was that it would take some time to consolidate inflation toward its 3 percent target.

He also said Mexico’s tight monetary and fiscal policy was good preparation for possible volatility stemming from presidential elections next year and NAFTA negotiations that may start in a few weeks.

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Mexican peso surges to 14-month highs as traders shrug off Trump

7/12/2017 Reuters

pesoMexico’s peso surged on Wednesday to a more than one-year high, bolstered by growing confidence that U.S. President Donald Trump will not pull out of NAFTA, as well as a major oil discovery and dovish comments by U.S. Federal Reserve Chair Janet Yellen.

The Mexican currency MXN=D2 gained about 0.7 percent to 17.781 per dollar, a level not seen since May 2016. It has more than recovered from a plunge after Trump was elected and threatened to impose punitive tariffs on Mexican goods to protect U.S. industry.

Expectations that Trump will not shred the North American Free Trade Agreement have fed demand for the peso and helped make it the top-performing emerging-markets currency this year, with a 17 percent gain. On Wednesday it was 3 percent stronger than just before Trump unexpectedly won the election.

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Mexico annual inflation rises to eight-and-a-half year high in June

07/07/2017 Reuters

banco de mexicoMexico’s annual inflation rate rose to its fastest pace in 8-1/2 years in June, but the increase was less than expected and that could support the view that the central bank may pause after a string of interest rate hikes.

Mexican consumer prices rose 6.31 percent in the year through June MXCPIX=ECI, the national statistics agency said on Friday, above the 6.16 percent rate in May but below a 6.34 percent forecast in a Reuters poll.

It was the highest reading since December 2008.

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Mexico central bank to take cue from Fed moves: minutes

7/6/2017 Reuters 

pesoThe majority of Mexico’s central bank board believes it is crucial to maintain the nation’s relative monetary policy stance with the United States now that the Federal Reserve has begun raising rates, according to minutes of the bank’s June 22 meeting released on Thursday.

“Most members said that given the recent interest rate increase by the Federal Reserve, it is indispensable right now to maintain the current relative position,” the statement said.

Nonetheless, most members also said there could be a pause in the bank’s rate hike cycle, considering that consumer price movements appear to be helping inflation reach the bank’s 3 percent target.

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Mexico Rate Cuts: Market’s Wrong If Peso Cooperates, BNP Says

06/28/2017 Barron’s

pesoMexico’s central bank raised its benchmark interest by 25 basis points last week, and many economists think Banxico’s hike last week was the last and that the benchmark interest rate will hover at 7%.

But BNP Paribas, which has been bullish on the Mexican peso, disagrees. The Mexican peso has rallied to fresh highs this week, has strengthened by 16% against the U.S. dollar this year. Marcelo Carvalho, head of emerging market research, and Felipe Klein, an economist, “pencil in steady 25-basis-point cuts at each of the eight regular policy meetings during the course of 2018.”

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