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MXN Gains as Sanchez Does Not See Reasons for Interest Rate Cut

February 28, 2013 at 2:10 by Vladimir Vyun

A heap of 100-peso billsThe Mexican peso gained today as Manuel Sanchez, a member of the central bank’s board, said that he is not supporting an interest rate cut. The market sentiment was also supportive for the currency.

Sanchez said yesterday in an interview to Bloomberg:

At this moment in time I don’t see a case for a rate cut. I would like to see a better behavior of inflation. The rigidity that inflation expectations have maintained for many, many years away from the target, above the target obviously — this stubbornness worries me.

An interest rate cut leads to weaker currency, therefore absence of a cut means that a currency will remain strong. The sentiment among Forex traders provided additional support for the peso, shifting from pessimism to more positive mode.

USD/MXN fell from 12.7638 to 12.7519 as of 2:10 GMT today. EUR/MXN declined from 16.7776 to 16.7677, falling from the daily high of 16.8118.

If you have any questions, comments, or opinions regarding the Mexican Peso, feel free to post them using the commentary form below.

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