Mexico: Mexican peso broadly stable in June
July 11, 2011
On 30 June, the Mexican peso (MXN) traded at 11.71 per USD, which represents a 1.2% depreciation over the 11.57 MXN per USD tallied on the last day of May. Despite the monthly decline, the peso has experienced a 10.1% appreciation in nominal terms versus the U.S. dollar compared to the same period last year. Mexico, as most developing economies, has experienced a sustained appreciation of its currency in the last two years, owing to strong capital inflows coming from developed economies that seek higher rates of return. However, in stark difference with most other developing economies, inflationary pressures in Mexico remain contained, thus allowing monetary authorities to maintain interest rates at the current record low of 4.50% in the months to come. Hence, the Mexican peso is currently somewhat less attractive than most of its regional counterparts, where monetary authorities raised interest rates to higher levels.