Mexican Peso Recovers Over 20 Cents After Stabilizing Remarks from the Bank of Japan

The local currency gained strongly midweek in a market less concerned about Japanese interest rates and the possibility of massive carry trade unwinding.

The Mexican peso recovered ground against the dollar on Wednesday. The local currency gained strongly midweek in a market less worried about Japanese interest rates and the potential for massive carry trade unwinding involving the yen.

The exchange rate closed the day at 19.2864 pesos per dollar. Compared to yesterday’s rate of 19.5257, according to data from the Bank of Mexico (Banxico), this movement represented a gain of 23.93 cents, equivalent to 1.24 percent.

The dollar’s price moved within an open range, with a high of 19.6000 pesos and a low of 19.1174. The Dollar Index (DXY) from the Intercontinental Exchange, which compares the greenback to six benchmark currencies, rose 0.22% to a level of 103.19 points.

Shinichi Uchida, Deputy Governor of the Bank of Japan (BoJ), said market reactions to last week’s surprise rate hike required greater caution before raising rates again. The BoJ’s announcement had caused volatility.

The peso’s recovery was attributed to a simple corrective effect. The currency gained more than 30 cents from the previous close after the BoJ’s deputy governor reassured markets that they would refrain from making further rate hikes. In the previous four sessions, the peso had accumulated a loss of more than 5%, briefly surpassing the 20 per dollar mark, partly due to the yen’s revaluation following the rate hike, which forced the unwinding of carry trades.

ABOUT THE AUTHOR See More

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

Related Articles

Higher U.S Tariffs For Canada, Mexico, China, Japan, India, and Germany

1 month ago

Save

Bitcoin Sinks Below $100K Amid Tariffs Battle

3 mo ago

Save

U.S Tariffs on Canada, Mexico and China begin Saturday

3 mo ago

Save

Comments

0 0 votes

Article Rating

Subscribe

Login

Notify of

new follow-up comments new replies to my comments

Please login to comment

0 Comments

Oldest

Newest Most Voted

Inline Feedbacks

View all comments