Mexican peso/JPY fell below last week's low, with attention this week focused on the release of the September CPI and the central bank's next move. Depending on the CPI, expectations for a resumption of rate cuts or for a rate hike could shift.
The Mexican peso/yen opened last week around 8.875 yen, then plunged into the 8.7 yen range under the influence of a stronger dollar and a stronger yen, with the heavy tone continuing thereafter. On the 29th, it fell below the year-to-date low of 8.677 yen, and on the 30th it declined to around 8.649 yen. The following day, it set another year-to-date low at around 8.548 yen. The peso, as an emerging-market and high-yield currency, appeared to have been affected by the unwinding of carry trades, although some recovery was seen in the Tokyo market on the 2nd.
The focus this week is Mexico's September consumer price index (CPI), to be released on the 8th. Although the Bank of Mexico left its policy rate unchanged at 6.50% at its previous meeting, it removed the wording “maintain the current interest rate level” from its statement and cited the progress of inflation, exchange-rate pass-through, supply and demand conditions, and inflation expectations as factors for future decisions. If the CPI exceeds market expectations, expectations of a rate hike could emerge, while if it falls short, expectations of a rate cut could recede.
The expected range for this week is stated as 8.525-8.750 yen, with volatile trading anticipated. Crude oil prices and the performance of major-country equities are also cited as points of interest. As a scalar, it is necessary to monitor developments going forward.
The key focus this week is the September CPI announcement on the 8th and its role as a factor in the Bank of Mexico's future monetary policy decisions. In light of these factors, developments in the peso's exchange rate against the dollar could also be affected.