Mexico Peso falls to weakest level since February

By Nancy Caouette

MEXICO CITY (AA) – The Mexican peso tumbled 0.9 percent to 18.808 per dollar Monday -- its lowest rate since the central bank unexpectedly raised interest rates earlier this year in an attempt to repel speculators.

According to financial group Banco Base, the decline of the peso in recent days is partly due to the strengthening of the dollar and fall in oil prices.

“Another event that causes worries on the markets is the referendum in Britain on June 23 that will decide if the country leaves or stays in the European Union,” Gabriela Siller, financial and economic analysis director at Banco Base.

The free fall may not be over, however, as the Grupo Financiero Banorte SAB financial group said Monday that there is a “possibility’’ the peso will soon fall below 19 per dollar.

Despite the depreciation, analysts believe officials will not announce any intervention plan before the U.K. holds its referendum.

The Mexican central bank surprised everyone by raising the benchmark interest rate in February.

‘”This does not mean the beginning of a cycle of interest rate hikes," bank chief Agustin Carstens, said at the time.

But investors are betting that the bank will raise rates at its next scheduled monetary policy meeting at the end of the month.

The peso has underperformed against its Latin American peers for months, losing 8.4 percent since the beginning of the year.