Yeah, so… the peso.
Here are the headlines:
- BANXICO TO BOOST FX HEDGES IN AUCTIONS
- BANXICO TO INCREASE FX HEDGES AUCTIONS BY $4B
So those are basically just NDFs and the effect is something akin to selling dollars although without draining Mexico’s reserves, hence this:
That comes after this:
And my guess would be that this morning’s headlines suggest they aren’t going to sit around and let this feed back into inflation amid still fraught NAFTA discussions.
Actually, it looks like that’s more than “my guess.” Here’s a quick note from Bloomberg saying the same thing: “The recent selloff in the peso apparently is making the Mexican central bank uncomfortable in terms of its impact on inflation.”
