MXN: a worst performer this tri-mester – Rabobank

Analysts at Rabobank looked at the MXN noted that it been one of the worst performing currencies over the past three months.

Key Quotes:

“Of the currencies we follow closely, only IDR has underperformed MXN although we can add EGP, SRD, VEF and YER to the list as well but those are highly illiquid currencies (if you can name the country for each of those without the use of the internet then kudos to you).

In fact, many maybe particularly surprised at MXN underperformance given that the WTI oil price hasrisen over 50% in the past three months. Indeed, the average 3mth rolling correlation of daily % returns of USD/MXN and WTI in 2015 was statistically significant at the 99% confidence interval. That correlation has been breaking down. One reason we suspect for this breakdown is that the recent rally in oil has been very much driven by the supply side.

Of course, oversupply was the likely driver of the initial tumble in oil prices back in 2014 but it is fair to say that the black stuff became somewhat of a bellwether for global risk sentiment during much of 2015 and the start of this year. However, the rise in …read more

Source:: FX Street