Experts warn Mexico’s peso defence could be costly
Risks on the horizon prompt concerns around the Bank of Mexico’s approach to forex volatility
Mexico’s central bank faces a trade-off. Amid pressure on the peso, it has turned to a mix of interest rate hikes and hedging programmes to defend the currency. But the former could put a brake on economic growth, while the latter could incur large losses.
On June 14, the peso depreciated to a new low of 20.61 per $1 – a decline of 14.4% since April. The movement itself will not come as a surprise to markets after the Federal Reserve’s president Jerome Powell announced the Federal Open
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