The Mexican currency (peso) dropped on concerns that demand for Mexican exports will drop, the fall in the peso came after Federal Reserve Chairman Ben Bernanke announced a deteriorating U.S. economy.

The fall in the Mexican currency wiped out early gains that were fueled by the expectation that the Mexican central bank will maintain its benchmark interest rate at 7.5% tomorrow.

Investors expect the Peso to bounce back due to the widening gap in the difference between the U.S. and Mexican interest rates, with Mexican assets looking increasingly attractive.
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The Mexican currency (peso) saw gains today after the Federal Reserve cut the U.S. interest rate by 50 basis points. The move by the Fed has made yields in emerging market assets more attractive.

The Fed has lowered the benchmark interest rate to 3% in an attempt to prevent the U.S. economy from falling into a recession. The benchmark interest rate in Mexico is currently 7.5%.
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Mexican Currency rallied today after the Federal Reserve cut U.S. interest rates. Investors were lured by Mexico’s fixed income market yielding 7.5% after the Fed dropped the U.S. rate to 3.5%. With the spread between the yields of the Mexican Currency and U.S. dollar widening Mexican assets are beginning to look a lot more attractive.

This gain of 0.6% in the Mexican Currency comes after a sharp drop of 1% yesterday, the largest decline in five months, as investors fled global stock markets and emerging-market currencies fearing a global recession. The gain was however far from being as promising as the 2.1% advance in the Brazilian Real and the 1.3% jump in the Chilean peso.
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