- The Mexican peso outperformed the gains for the second consecutive day against the US dollar.
- Banxico lowers the key rate from 6% to 5.5%, as expected.
The USD / MXN pair fell following the Bank of Mexico’s decision to cut rates. At the time of writing, it is below 23.90, trading at two-day lows.
Before Banxico’s announcement, the pair moved sideways between 24.10 and 24.40, supported by a solid performance from the Mexican peso. Below 24.00, the bearish momentum has intensified. The next support is seen at 23.80 followed by 23.55. On the rise, 24.15 is the immediate resistance from time to time comes the critic 24.35 / 40 which, if broken, should lead to more gains.
Mexico’s central bank moves as planned
“Given the risks mentioned for inflation, economic activity and the financial markets, major challenges arise for monetary policy and for the economy in general. Given the room for maneuver that results from these implications for equilibrium monetary policy and with the presence of all its members, the General Management of Banco de México has unanimously decided to lower by 50 basis points the target for the overnight interbank interest rate of 50 basis points to one of 5.5%, “said Banxico in its statement.
Against the backdrop of falling inflation and impact on the economic activity of the coronavirus, analysts continue to note a further drop in short-term rates in Mexico.