The Mexican peso advanced on Friday against the U.S. dollar after the central bank opted to slash interest rates for the first time in almost four years, Reuters reports.
By reducing borrowing costs from 4.5 percent to 4 percent, the Bank of Mexico is aiming to induce growth and development in Latin America's second-largest economy. Brazil, which also saw its currency gain in value on Friday, hosts the region's largest economy.
"This change recognizes the mid-term achievements in combating inflation and helps the economy adjust to a scenario of less economic growth and inflation," according to a statement released by the central bank with the interest rate decision, as cited by Bloomberg.
Not since 2009 has the Bank of Mexico pulled down borrowing costs. Mexico had been the sole representative of Group of 20 countries to leave interest rates intact and opt against purchasing debt as intervention methods since July 2009.
Only seven of 25 analysts surveyed by Bloomberg forecast the Bank of Mexico would slash interest rates, the news source reports.
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