The weight pressed against the dollar this Wednesday. The local currency advanced to close to 20 units per greenback, after confirming an expected increase in the interest rates of the Federal Reserve (Fed).
The exchange rate closed the session at 20.0808 units compared to a reading of 20.2727 units yesterday, according to the Bank of Mexico (Banxico). This means a gain for the peso of 19.19 cents or 0.95 percent.
The advance of the Mexican currency was outlined since the opening, before a weakening of the dollar that was extended after the central bank’s monetary policy decision. The Dollar Index (DXY), closed down -0.75% at 102.69 units.
The Federal Reserve announced this afternoon its decision to raise interest rates by half a percentage point, to a range between 0.75% and 1 percent. The move was expected by the market due to a 40-year inflation peak.
“Inflation is very high. We are moving quickly to reduce it. We have the necessary tools and we are determined to restore price stability,” said Jerome Powell, president of the central bank.
In addition to the weakening of the US currency, analysts attributed the improvement in the peso to bets on more rate movements by Banxico, which has raised its interest rates by 2.50% in a short time.
“The market will be evaluating the likely pace of interest rate increases over the next few months,” Gabriela Siller, director of economic and financial analysis at local firm Banco Base, said in a report.
The cross traded in a range between a high of 20.3085 units and a low of 20.0421 units, its best level in almost two weeks. In two positive days, the local currency has recovered 41.11 cents or 2 percent.