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Analysts Highlight Concerns With AMLO Banxico Pick

MEXICO
  • Victoria Rodriguez, the deputy finance minister for spending tapped by President AMLO to lead the Banxico board, said she's committed to complying with Banxico's autonomy, speaking in a twitter video.
    • Rodriguez added she's committed to combating inflation and to not touching international reserves.
  • Barclays strategists closes recommendation to buy USD/MXN put spreads and recommends to pay the 2s10s TIIE spread.
    • "The initial market reaction to the nomination (weaker MXN and steeper yield curve) could reflect concerns that the new candidate might not be independent enough from the current administration and/or doubts in terms of her technical background, qualifications and knowledge of monetary policy conduction"
  • JPMorgan share these concerns: "While she has long experience in public finances and this should be enough to consider her as a suitable candidate for the Central Bank given the ambiguous requirements specified in the Bank's Law, it is concerning that she lacks experience as a central banker and on monetary policy."
  • While they had concerns with Herrera – "He actively participated in the monetary policy committees of Banxico (no voting rights) and the Exchange Rate Commission, and his equally active role in dealing with external policymakers and international financial institutions allowed him to gain policymaker experience ahead of his nomination."
  • However, JPM also believe that the solid staff in Banxico, and a board that has gained experience in the last three years, should appease some of the most important concerns.
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