- Mexican Peso gains traction on Wednesday, sponsored by Banxico Deputy Governor comments.
- Jonathan Heath wants higher rates for some time, disregarding a recession.
- President Sheinbaum has pledged to be fiscally responsible.
The Mexican Peso climbed for the second straight day on Wednesday against the US Dollar following hawkish comments of Bank of Mexico (Banxico) Deputy Governor Jonathan Heath, who voted against lowering rates by 25 basis points at the September 26 monetary policy meeting. The USD/MXN trades at 19.37, down by 1.18%.
Heath appeared on Banorte’s podcast and said that policy should remain at the current level for “more time” while acknowledging that core inflation is coming toward the target. He added that the US Federal Reserve’s (Fed) rate cut wouldn’t directly impact Banxico’s policy path and does not believe Mexico is close to a recession.
Mexico’s docket revealed that Business Confidence deteriorated in September, while July's Gross Fixed Investment figures improved in monthly and annual terms.
In addition, President Claudia Sheinbaum began her six-year term. In her inaugural speech, she reassured investors that their investments were secure and added that she would respect Banxico’s autonomy to dictate its policies.
Sheinbaum pledged fiscal responsibility and defended the judiciary reform approved in September. According to foreign analysts and investors, this reform threatens the rule of law, and that sentiment has injured the Peso in recent months.
“Disciplined management of the budget and of state-owned enterprises, progress on public security, and safeguarding the integrity of key institutions will be key to preserving market sentiment and sovereign debt ratings,” said Alberto Ramos, head of Goldman Sachs Latina America economic research team.
In the US, ADP National Employment Change data for September exceeded estimates after registering five months of soft readings.
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