Mexican Peso's Surprising Drop Spurs Speculation Banxico to Act
- Currency has tumbled 5.9% this year, worst in Latin America
- One-year implied volatility climbs to highest since October
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The tumble in Mexico’s peso this year as volatility surges is spurring speculation that the central bank will step up efforts to support the currency.
Policy makers will probably reintroduce daily auctions of $200 million at no minimum price at the end of this month, a policy in place from August through November, according to Citigroup Inc. Grupo Financiero Banorte SA expects the size of auctions when the peso falls at least 1.5 percent to swell to $500 million from $200 million. Rabobank predicts sustained volatility will spur bigger increases to the central bank’s benchmark rate.