Operating conditions in the exchange market “have returned to adequate levels” of liquidity and depth, Banxico said in the statement. “Credit institutions and other economic agents have the conditions to cover their risks related to the exchange rate directly in the exchange market.”

The shift is “a clear sign that the peso might be too strong,” said Benito Berber, chief economist for the Americas at Natixis.

Hedges will be rolled over once and for 50% of the current amount starting next month. For six-month operations, the term will be reduced to one month with the renewal only applying to 50% of amount. Operations with nine and 12-month terms will be left to expire.

Eoin Treacy's view

Mexico having one of the strongest currencies in the world for two years in the row is not something anyone is accustomed to reading. In fact, this trend of outperformance is the longest time the Peso has traded above the 1000-day in decades. It’s natural that the central bank wishes to slow down the pace of appreciation so a reversion towards the mean is underway.