Mexican peso recovers after losses due to nomination to Banxico

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(Bloomberg) – The Mexican peso was rebounding against the dollar, rebounding from a three-day slide fueled by the surprise announcement about the future direction of the Mexican central bank.

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The peso rose as much as 1.8% on the day to 21.2839 per dollar on Tuesday, briefly strengthening to the level it was at before the announcement that Victoria Rodríguez would be nominated to head Banco de México.

The appointment has generated great uncertainty in the Mexican markets as operators evaluate Rodríguez’s ratings. The candidate has little experience in central banking and has close ties to President Andrés Manuel López Obrador, raising concerns that the institution is not as firmly independent as it has been in the past.

The focus on a new central bank chief diminished on Tuesday, making the Mexican peso the best emerging market currency after the Chilean peso, benefiting from a weaker dollar. The greenback took center stage as traders evaluated the prospects of the Federal Reserve tightening its monetary policy amid concerns about the new omicron variant. The greenback eased its declines as traders raised bets on the pace of tightening following comments from Fed Chairman Jerome Powell on the possibility of a more rapid reduction in asset purchases.

Original Note:

Mexican Peso Recovers Losses Spurred by Pick for Banxico Chief

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