Peso advances as Fed minutes spur bets on rate hike

The Mexican peso appreciated against the dollar this Wednesday. The local currency recovered ground in a market that bets on more and higher rate increases, after a minute of the Federal Reserve which confirmed it, one day before knowing the key data of inflation.

In meeting minutes, US central bank officials agreed that a more restrictive stance is needed to bring inflation to its target. His position is that “the cost of taking too little outweighs the cost of taking too much.”

After trading slight gains for the peso during the session, the exchange rate ended the day at 20.0094 units, extending the initial advance. Against its 20.1071 yesterday, in the register of the Bank of Mexico (Banxico), gained 9.77 cents or 0.49 percent.

The cross operated in an open range between a maximum of 20.1157 units and a minimum of 19.9695 units, which it marked after the publication of the minutes. The Dollar Index (DXY), which measures the greenback against six major benchmark currencies, was up 0.08% at 113.31 points.

Although this year has been one of strength for the US dollar due to interest rate hikes in the world’s largest economy, the peso has remained stable in part thanks to similar monetary policy measures adopted by the local authority.

Tomorrow the publication of the consumer price index data for the month of September in the United States is expected. Price pressure is at a 40-year high, while the labor market is increasingly tight.

“Our market could have less exposure to the inflation data in the United States, mainly with respect to the US markets,” said Brian Rodríguez, an analyst at the Monex financial group.

jose.rivera@eleconomista.mx