USD/MXN retreats modestly, remains near 20.00; Banxico to decide next week

The Mexican peso dropped sharply in the market following the results of the US presidential election. It is by far the worst performer in the market on Wednesday. Many financial assets reversed its price trend during the last hour but it was not the case for the peso, that only trimmed losses. 

USD/MXN retreated and it was testing an intraday support around 19.80, up more than 7% for the day. During the Asian session, it marked new all-time highs at 20.77 before pulling back. 

Banxico waits

The Finance Minister, José Meade and the Governor of the Bank of Mexico, Agustin Carstens, deliver a speech hours ago following the repercussion of the unexpected victory of Donald Trump. Analysts speculated with the possibility of some emergency measures or a rate hike, but Carstens said that they would wait until next week (Nov 17), as schedule, when Banxico meets in order to decide on rates. 

After the speech the USD/MXN rose to 20.40, approaching daily highs but then retreated back below 20.00. In order to keep inflation expectations anchored as Banxico official’s desire, many analysts now expect an interest rate hike next week and the question appears to be how much will the Mexican central bank raise rates.