Mexican Peso Extends Slump Despite Interest Rate Hike

The recent slump of the Mexican peso, which followed the unexpected outcome of the US presidential elections prompted the central bank of Mexico to raise interest rates yesterday. But that did not help the currency much, and it continued its drop today.

The Banco de Mexico increased its benchmark rate by 50 basis points to 5.25% yesterday. It is the highest level in more than 7 years. While the move was not unexpected, many market analysts were counting on a bigger hike, therefore the actual hike was a bit underwhelming.

USD/MXN rose 0.53% to 20.5366 as of 10:54 GMT today, though it was up more 1% intraday, retreating from the daily high as of now.

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