This is noteworthy as in this period Mexico has not resorted to any type of foreign exchange intervention, a policy that has become more pervasive in several other countries. The freely floating exchange rate regime in Mexico is clearly in force.3 Since last May, the yield curve has steepened in tandem with that of the United States.
Shifts in the yield curve have mainly reflected higher term premiums, stemming from anticipated unwinding of the expansionary monetary stance in the United States. Possible effects from domestic expected inflation, currency risk and future policy interest rate hikes do not seem to have played an important role.