The pair USD/MXN fell in February from 17.17 to 17.06. MUFG Bank economists analyze the prospects for the Mexican peso.
Prospects for weakening the MXN
The MXN could weaken in the coming months due to the dovish tone of the Banxico minutes and weaker than expected industrial production and retail sales that could prompt a Banxico rate cut before the Fed, although some Banxico members are willing to synchronize their decision with the Fed.
Starting in June, the MXN tends to be more heavily influenced by expectations about the new government and its policies. Eurasia estimates that Ms. Claudia Sheinbaum has an 80% chance of becoming the next president following the June 2 elections. The Morena party tends to maintain the majority in both the Lower House and the Senate, as well as the majority of state governors. However, the government coalition may not obtain a two-thirds majority in Congress, so it would have to negotiate with the opposition to pass key reforms.
The US elections in November and possible changes in immigration and trade policies could weigh on the Mexican economy. In light of these risks, we expect a gradual weakening of the MXN.
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.
