• The Mexican Peso is rising after the release of broadly inflationary data suggests interest rates might remain elevated. 
• Relatively high interest rates in Mexico, at 11.00%, are drawing foreign capital inflows, supporting MXN. 
• USD/MXN has broken below the key June 24 low at 17.87.  

The Mexican Peso (MXN) continues appreciating in its key pairs on Wednesday after the release of Mexican macroeconomic data on Tuesday showed continued signs of inflationary pressures in the economy. 

An overall beneficial backdrop due to carry flows is further supporting the Peso because of the attractiveness to foreign investors of the relatively high interest rates on offer in Mexico (11.00%). 

The carry trade is an operation in which investors borrow in a currency where interest rates are low (like the Yen) and bank the money in a currency where interest rates are high (like MXN). The difference between the interest payments on the loan and the interest paid on the deposit (or bond) renders the profit, all other things being equal