In a surprise move late Friday, the Mexican central bank (Banxico) delivered an emergency rate cut of 50bps to 6.50% amid risks of recession fuelled by the recent oil-price collapse and coronavirus outbreak.

The decision was announced in an unscheduled meeting that took placed for the first time in four years.

SUMMARY OF THE STATEMENT

“Global and domestic financial markets have been subject to high volatility over the last weeks due to the uncertainty regarding the impact of COVID-19 on world economic activity, and to the recent fall in international oil prices.”

“In this context, foreign exchange and fixed income markets in Mexico have undergone significant adjustments, lower liquidity, and a deterioration of trading conditions.”

USD/MXN eased-off record highs

On the emergency rate cut announcement, the Mexican peso reversed slightly from a record low of 24.565 reached against the US dollar. The USD/MXN pair still settled the week close to the all time high, up 10% on the week.

The renewed weakness in oil prices triggered the latest declines in the Mexican peso.

• USD/MXN back above 24.00, up 10% over the week