Tuesday, 10 February 2009

Fitch Vs. Mexico: Part II

Here is the text of the Reuters story about the impact of Fitch's comments on the Mexican peso:
''Mexico's peso weakened on Tuesday after credit ratings agency Fitch said on Monday it is monitoring Mexico's recent currency intervention actions to decide whether to downgrade the country's debt ratings. The peso lost as much as 0.57 percent to 14.2790 per dollar, slipping for the first time in four days.´´
Last week, the Banco de Mexico (Banxico) stopped disclosing information on its foreign-exchange market interventions, seeking to stop a slide in the currency that sent the peso to a record low. Banxico has since been buying pesos from banks, and witholding information on the amounts purchased. The bank therefore moved from a model of transparency to the other extreme. We guess it is aimed at discouraging speculation -- but scrapping transparency has its costs obviously. Fitch rates Mexico's long-term foreign currency ratings at BBB+, the third lowest investment grade ranking.

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