Back
13 Mar 2015
Banxico intervenes to calm markets – Scotiabank
FXStreet (Edinburgh) - Chief FX Strategist at Scotiabank Eduardo Suarez assessed the recent measures by the Mexican central bank, Banxico.
Key Quotes
“MXN decoupled from broad‐based USD strength yesterday, following the FX Commission’s announcement of additional measures to stabilize the peso market”.
“Banxico will now be selling US$52mn in the spot market on a daily basis in order to provide dollar liquidity to the local market”.
“These sales will not be tied to a specific level, and will take place in addition to the US$200mn that Banxico has been offering at a minimum price since December 2014”.
“Despite these additional mechanism, Banxico remains a “net FX reserve accumulator”, due to the USD it purchases from oil sales. We were surprised by the FX intervention announcement, given we only expected verbal signs that authorities were watching markets for signs of deteriorating liquidity”.
“We don’t think this intervention size is by any means a trend changer, but it should serve to calm markets by signalling stronger measures could be expected if markets break‐down”.
Key Quotes
“MXN decoupled from broad‐based USD strength yesterday, following the FX Commission’s announcement of additional measures to stabilize the peso market”.
“Banxico will now be selling US$52mn in the spot market on a daily basis in order to provide dollar liquidity to the local market”.
“These sales will not be tied to a specific level, and will take place in addition to the US$200mn that Banxico has been offering at a minimum price since December 2014”.
“Despite these additional mechanism, Banxico remains a “net FX reserve accumulator”, due to the USD it purchases from oil sales. We were surprised by the FX intervention announcement, given we only expected verbal signs that authorities were watching markets for signs of deteriorating liquidity”.
“We don’t think this intervention size is by any means a trend changer, but it should serve to calm markets by signalling stronger measures could be expected if markets break‐down”.