Mexican president does U-turn on central bank job, peso stumbles

The facade of the Bank of Mexico building is pictured in downtown in Mexico City, Mexico February 28, 2019. REUTERS/Daniel Becerril/File PhotoMexico’s president on Wednesday nominated a woman to run the central bank for the first time after unexpectedly ditching the previous candidate, a move that roiled markets, pushing down the peso currency and stirring uncertainty over monetary policy.

Taking government officials by surprise, President Andres Manuel Lopez Obrador proposed Victoria Rodriguez, a deputy finance minister, to replace his initial nominee for central bank governor, former finance minister Arturo Herrera.

The shake-up as Mexico battles the highest inflation in 20 years perplexed investors, prompting a sell-off in Mexican assets, analysts said. At one point, the peso currency fell over 2% against the dollar, although it later recouped some losses.

The cost of insuring exposure to Mexico’s sovereign debt edged up to its highest since March as five-year credit default swaps rose 5 basis points to 112 bps, according to IHS Markit data. Spreads to U.S. Treasuries also rose to hit 365 bps, the widest since early October.

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