MXN remains vulnerable – Rabobank

By FXStreet FXStreet (Edinburgh) – Strategist at Rabobank Christian Lawrence expects the Mexican currency to remain under pressure in the next months.

Key Quotes

“MXN has been the worst-performing LatAm currency so far this year, ARS excluded. This, despite being a standout in the region for its closer links to the US business cycle than the commodity/China cycle (although weak oil does impact)”.

“We have often highlighted the divergence of MXN from fundamentals as its role as a proxy hedge for the LatAm region dominates. Given we think the year ahead will be very difficult for LatAm, MXN is likely to remain under pressure regardless of domestic economic performance”.

“However, we expect the Bank to outpace the Fed’s hiking cycle, which should provide some support for MXN. We expect to see sharp moves in USD/MXN that could provide attractive entry levels”.
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Source:: FX Street