Mexican peso slides to 16-month low against USD

Source: Xinhua| 2018-06-14 10:24:52|Editor: ZD
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MEXICO CITY, June 13 (Xinhua) -- Mexico's peso traded at a 16-month low on Wednesday amid a strengthening U.S. dollar and news that the U.S. Federal Reserve (Fed) again increased its short term interest rates.

The peso, one of the most valued emerging economy currencies, closed trading at an interbank rate of 20.80 to the dollar, according to the central Bank of Mexico (Banxico).

It was the weakest rate since the peso traded at 20.82 to the dollar on Jan. 31, 2017.

During Wednesday's trading, the peso-dollar exchange rate hit a minimum of 20.58 and a maximum of 20.83.

The Fed on Wednesday raised short-term interest rates by a quarter of a percentage point, the second increase this year and the seventh increase since the end of 2015.

The increase pushed the target rate on federal funds to between 1.75 and 2 percent.

Mexico's Banorte financial group said the Fed decision "will likely cause headwinds" for emerging markets as the higher interest sparks an outflow of dollars.

Banorte also did not rule out the possibility that the peso will slip to 21 pesos against the dollar amid faltering negotiations with the United States and Canada to update the North American Free Trade Agreement (NAFTA) and the uncertainty stemming from the upcoming presidential elections on July 1.