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    USD/MXN hits 4-month highs, testing 19.00 Matías Salord

    The Mexican peso continues to be among the worst performers in the currency market. Today is falling for the fourth time in a row against the US dollar and reached the lowest level in four months.USD/MXN reached levels on top of 19.00 for the first time since February. It peaked at 19.02 and then pulled back. It was trading at 18.97, headed toward the second highest close in history; still far from the intraday record set back on February 11 at 19.44.“Low crude oil prices, slow global trade activity, and the high degree of event risk, including the US Presidential election in November, have weighed on the peso. Improved risk appetite and higher crude oil prices in the future, however, should ultimately provide support for the MXN”, said analysts at Lloyds Bank.USD/MXN accelerates to the upsideSince last Wednesday, the peso lost almost 5% versus the US dollar increasing speculations about what the Bank of Mexico would do if it continues to slide.Analysts from Lloyds explained that the PPP and real exchange rate valuations point to significant undervaluation of the peso at current levels. “After a surprise interest rate hike in February, Mexico’s central bank does not seem likely to adjust monetary policy ahead of any further moves by the US Federal Reserve, but the risk of increased FX intervention has risen substantially.” 

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