Mexico’s economy and exports will benefit from the Biden administration’s $1.9 trillion coronavirus relief package and at the same time, will pose challenges in the market, according to Bank of Mexico’s governor Alejandro Diaz de Leon.
U.S. Ten-year yields jumped to 13-month highs on Friday, fueled by optimism brought by the U.S. coronavirus relief package signed by President Joe Biden. The development, however, brought some pressure to Mexican bonds and the peso. Ten-year yields are used as a reference for global borrowing costs.
Earlier this month, the peso had fallen to 21.5090 per U.S. dollar, its lowest level since October 2020. On the other hand, 10-year Mexican yields jumped to 6.41%, their highest level since May 2020.
Banxico’s last monetary policy meeting on Feb. 11 moved to slash its benchmark interest rate, marking its first trim since September 2020.