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Mexican Peso Spikes On Banxico Headlines After Worst Retail Sales Drop In 4 Years

Courtesy of ZeroHedge. View original post here.

Against expectations of a 0.5% rise year-over-year, Mexican retail sales tumbled 0.2% YoY – the biggest drop since Oct 2013. However, the peso is spiking as soon as this data hit, Banxico stated it would increase its FX hedging program by $4 billion.

From bad to worse…

But The Central Bank beats dismal data…

Banxico says in statement it is increasing the amount it auctions in forex hedges for a total outstanding of $5b.

"Recently the foreign exchange market in our country has registered episodes of greater volatility, which has been reflected in a depreciation of the local currency against the dollar and in a slight deterioration of the conditions of operation of said market:" Banxico

Banxico will start on Thursday with a $1b auction. Subsequently and through Dec 6, it will auction $500m every week

Sending the peso soaring

It appears the recent selloff in the peso apparently is making the Mexican central bank uncomfortable in terms of its impact on inflation.


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