• President Lopez Obrador nominates Victoria Rodríguez to head the central bank.
  • Mexican peso tumbles across the board after the announcement.
  • Inflation in Mexico surpasses 7% to levels not seen in 20 years.

The Mexican peso is falling sharply against its main rivals on Wednesday, affected by the news regarding the nomination for the next head of the Bank of Mexico. The USD/MXN is rising almost 2%, trading near 21.60, the highest level since March.

As of writing, USD/MXN trades at 21.53. It peaked at 21.61, and a daily close around current levels would be the highest since October of 2020. The pair is testing the 2021 top it established back in March at 21.62.

Nomination changes at Banxico and higher than expected inflation

Mexican President Andres Manuel Lopez Obrador withdrew his nomination of former finance minister Arturo Herrera for governor of the central bank to replace current head, Alejandro Díaz de León. Lopez Obrador did not want Díaz de Leon to continue at the post and nominated Herrera back in June, leaving his post at the government a few weeks later.

On Wednesday, Lopez Obrador nominated Victoria Rodríguez Ceja. She holds a job at the Finance secretary and, if confirmed by the Senate, would be the first-ever female to lead Banxico.

The announcement came after data showed inflation accelerated during the first half of November (headline and core) surpassing expectations. The annual rate reached 7.05%, the highest level since April 2001. Banxico rose interest rates at the last meeting for the fourth consecutive time to 5% in order to curb inflation. Wednesday’s inflation figures warrant that more hikes are on the way.

At the same time, the US dollar remains strong in the market, boosted by recent economic data and higher yields. The rally of the greenback adds more fuel to the USD/MXN.

Technical levels

This article was originally published by Fxstreet.com.Read the original article here.