USD/MXN has largely recovered from the 2020/22 pandemic and energy supply crisis to trade near the 18.50 lows again. ING economists maintain a Bullish bias on the Mexican peso.
The weight looks good
“The very credible fiscal situation (Mexico’s 5-year CDS at 120 bp vs. Brazil’s 233 bp) and monetary (real rates at +2%) are strong drivers of MXN demand.”
“Banxico continues to match the Fed in its tightening cycle, which means that the policy rate will be close to 11% at the end of the quarter. Not bad with inflation at 8.5%. And as the market becomes more interested in the carry, the implied returns of 3 million MXN at 11.40% provided a very strong risk-adjusted carry.”
“The sale of Banamex or high inflation in the US pose the biggest threats“.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
