Mexico holds steady as Argentina, Brazil move to shore up currencies

While Argentina and Brazil have taken significant steps recently to support their currencies, there has been little activity on this front in the region's second biggest economy – Mexico.

Beyond announcing a set of dollar auctions for Monday – much in line with similar auctions ongoing since February 2017, Mexico's central bank (Banxico) took no unusual or extraordinary steps to shore up the peso on the latest aggressive posturing at the Fed.

While the Fed has added pressure on the bank this year, and Friday's US labor report likely turned up the heat a bit more, Banxico already decided to hold off on a further rate hike last month with the benchmark at a post-financial crisis high of 7.5%.

With inflation in Mexico falling faster than expected in April, according to mid-month data, the building consensus among Mexico's private sector is that the central bank is probably not going to raise the rate again this month or in June and the next likely move would be a cut after the July election.

On Friday, Argentina announced a series of measures to support its peso, shortly after a sharp depreciation of the Brazilian real forced the central bank of Latin America's biggest economy to step up its intervention in the foreign exchange market.