Mexican peso rises for fifth session, stock market falls to lowest level since March 2021

MEXICO CITY, Jun 23 (Reuters) – The Mexican peso advanced on Thursday following the Bank of Mexico’s decision to raise its key rate again, while the stock market lost on fears of a global recession as major central banks tightened monetary policy.

The Mexican central bank raised its target for the Overnight Interbank Interest Rate by 75 basis points to 7.75% and warned that it intends to continue raising it, amid worsening inflation expectations.

* The domestic currency was trading at 20.0154 per dollar near the end of business, with an appreciation of 0.14% against Wednesday’s Reuters reference price, stringing together its fifth session of gains with a cumulative return of 1.9%.

* “The peso’s appreciation is partly due to market caution and the Bank of Mexico’s monetary policy decision,” said the firm Banco Base. “Banco de Mexico is likely to continue raising its interest rate at a pace of 75 basis points in the August 11 announcement.”

* The benchmark S&P;/BMV IPC stock index fell 1.03% to 46,657.88 points, its lowest closing level since March 5, 2021.

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* The local market has been one of the most affected by the latest declarations of U.S. authorities about a possible recession due to the Federal Reserve’s maneuvers to control inflation, according to experts from Metanálisis.

* Thursday’s decline was led by the shares of two of the country’s main mining companies.

* The shares of Industrias Peñoles, one of the world’s largest producers of refined silver, led the losses with 8.67% less at 187.61 pesos, followed by those of Grupo Mexico, one of the world’s main copper producers, which lost 5.71% to 81.52 pesos.

* In the debt market, the 10-year bond yield fell 16 basis points to 8.96%, as did the 20-year rate, which ended the session at 8.94%. (Report by Valentine Hilaire)