Home » Business » Banco de México announced second auction of debt in dollars for 5,000 million

Banco de México announced second auction of debt in dollars for 5,000 million

Bank of Mexico announced a second credit line auction denominated in dollars for this month.

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Banxico will offer up to USD 5 billion in an auction on April 6, the second such sale to be held this month, as the central bank is trying to boost liquidity in the market. The sale will be financed by a $ 60 billion swap line with the United States Federal Reserve.

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The announcement accompanied a rebound in the Mexican peso, which advanced amid an increase in oil prices. Analysts say that, with much more power remaining on the trade line, Ongoing auctions of this type could end up offering support for the currency.

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“All this liquidity could limit the rise of USD / MXN in the short term, because it alleviates a little the pressure of financing of the dollar”said Danny Fang, a strategist at BBVA in New York. “At the same time, persistent uncertainty about the global economic outlook – because we still don’t know what the quarantine exit plans are – could limit how much the peso can recover.”

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Fang added that Banxico still has plenty of scope to hold more auctions, and that the Fed would probably have no problem increasing the swap line amount if necessary.

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Banxico’s first auction on Wednesday had an oversubscription, with a total demand that reached USD 6.3 billion for the sale of USD 5 billion. The loan to be sold on Monday will have an maturity of 84 days.

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The Mexican peso falls and points to a bad week as the effects of the coronavirus deepen

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The Mexican peso depreciated on Thursday and was shaping a weekly drop of more than 5% amid a flare-up of the economic consequences of the coronavirus epidemic, which has already infected more than a million people around the world.

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The peso (MXN) was trading at 24.6350 per dollar, with a loss of 1.72% compared to 24.2210 in the Reuters reference price on Thursday.

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The US economy lost jobs in March, an abrupt end to the historic streak of 113 straight months of job growth, given that strict measures to contain the spread of the coronavirus closed factories and businesses, confirming the nearness of a recession.

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The local currency was falling despite gains in oil prices.

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“Given the skepticism of the market about a possible recovery of oil in the short or medium term, the peso has little support to find here. On the other hand, The revision of the fiscal budget for this year is added to the list of risks for the credit evaluation of the Mexican economy.Monex Europe said in a report.

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