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Tags: mexico | peso | dollars | trump

Mexico Peso Rebounds From Record Low as Central Bank Acts

Mexico Peso Rebounds From Record Low as Central Bank Acts

(Getty-AFP/Yuri Cortez)

Thursday, 05 January 2017 11:18 AM EST

The Mexican peso strengthened on Thursday after the central bank sold dollars to support the ailing currency, which has been battered by uncertainty over U.S. President-elect Donald Trump.

The peso firmed as much as 1.5 percent after slumping to a record low on Wednesday.

The currency posted its worst yearly performance since 2008 last year on concerns that Trump could enact protectionist policies against Mexico. It extended losses in the first days of 2017 after carmaker Ford Motor Co. announced it would cancel a planned $1.6 billion investment in central Mexico following criticism by Trump.

The Mexican central bank reacted by selling an unspecified amount of dollars at home and in New York to prop up the currency. Analysts with BNP Paribas praised the move, saying the bank will need to adopt a more aggressive intervention policy than it did in the last two years in order to correct currency imbalances.

In a client note, they estimated the Mexican central bank currently has more than $40 billion on hand it could use to buffer the peso's decline.

Other Latin American currencies were also higher after a softer-than-expected U.S. jobs report triggered worldwide profit-taking on the U.S. dollar. U.S. private employers added 153,000 jobs in December, fewer than the month before and below analyst expectations of 170,000, according to the ADP National Employment Report.

The Chilean and Colombian pesos both strengthened over 1 percent, also helped by rising prices of oil, iron ore and other basic products. Brazil's benchmark Bovespa stock index rose, supported by shares of miners, steelmakers and other commodity-related firms.

But the Brazilian real was only 0.4 percent higher as traders refrained from pushing the currency past 3.20 to the dollar for the first time since early November.

© 2022 Thomson/Reuters. All rights reserved.


Markets
The Mexican peso strengthened on Thursday after the central bank sold dollars to support the ailing currency, which has been battered by uncertainty over U.S. President-elect Donald Trump.
mexico, peso, dollars, trump
290
2017-18-05
Thursday, 05 January 2017 11:18 AM
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