Banxico to auction as much as USD20bn in FX hedges to support MXN – RBC CM

Sue Trinh, Head of Asia FX Strategy at RBC Capital Markets, notes that the MXN rallied the most in a month as Banxico announced that it will auction as much as USD20bn in FX hedges for the first time in a bid to support MXN without draining international reserves.

Key Quotes

“The first Banxico auction will take place on March 6 for up to $1bn. We do not see this having a sustainable impact on the level or downtrend in MXN (RBC USD/MXN end-Q1 forecast: 20.75; spot 20.01), with trade policies and the complicated agenda between Mexico and the US being the main drivers for the currency.”