Anna 
The Mexican Peso (MXN) saw a rise in value, extending the robust rally observed across most MXN pairs on Friday, spurred by comments from Irene Espinosa, the Deputy Governor of the Bank of Mexico (Banxico). Espinosa emphasized the necessity for Banxico to maintain interest rates at their current elevated level of 11.0%, citing ongoing challenges in combating inflation.
Espinosa’s remarks provided a positive outlook for the Mexican Peso, as higher interest rates tend to attract increased foreign capital inflows. This sentiment stands in contrast to the prevailing expectations for many major currencies, where interest rate cuts are either anticipated or imminent.
As of the latest update, the USD/MXN pair is trading at 16.60, EUR/MXN at 18.05, and GBP/MXN at 21.07.
The Mexican Peso’s ascent was further fueled by Espinosa’s statements, indicating a lack of urgency in pursuing interest rate cuts, as reported by Milenio.com. She also criticized Banxico’s decision to cut interest rates in March, labeling it as “premature,” as highlighted by Christian Borjan Valencia, Editor at FXStreet.
Espinosa’s stance aligns with her position during the Banxico March meeting, where she dissented from the majority decision to reduce interest rates by 0.25% from 11.25%. This divergence in viewpoints is notable, particularly when contrasted with the perspective of Banxico Governor Victoria Rodriguez Ceja, according to Milenio.com.
Espinosa’s advocacy for interest rate stability stands in contrast to the anticipated monetary policy trajectories of major central banks, including the US Dollar (USD), Euro (EUR), and Pound (GBP).
The European Central Bank (ECB) has signaled a commitment to implementing interest rate cuts in June, while the Bank of England (BoE) is widely expected to enact rate reductions in August. Additionally, recent indications from the Federal Reserve (Fed) suggest a growing likelihood of rate cuts in September, as evidenced by futures traders’ increased bets, currently standing at around 65%, according to the CME FedWatch tool.
Looking ahead, the release of Mexican Retail Sales data for March at 12:00 GMT on Monday could introduce volatility to the economic landscape, potentially impacting the trajectory of the Mexican Peso in the near term.
