3 May 2016
MXN remains vulnerable – Rabobank
Strategist at Rabobank Christian Lawrence sees the Mexican Peso still under pressure in the next months.
Key Quotes
“MXN has recouped nearly all of its 2016 losses after hitting a record high of 19.45 on February 11t. The strong recovery is likely a product of three factors”.
“Firstly, as the highest beta currency globally, the pick-up in global and local (Brazil) risk appetite has benefitted MXN”.
“Secondly, Banxico surprised the market with an inter-meeting 50bp hike while changing its FX intervention policy to a discretionary programme”.
“Thirdly, USD/MXN is the third highest correlated USD cross to changes in oil prices (after RUB and COP)”.
“We expect MXN to remain vulnerable to global risk sentiment and see it underperforming later in 2016. Some support may come from an expected 50bp of tightening from Banxico, however”.
Key Quotes
“MXN has recouped nearly all of its 2016 losses after hitting a record high of 19.45 on February 11t. The strong recovery is likely a product of three factors”.
“Firstly, as the highest beta currency globally, the pick-up in global and local (Brazil) risk appetite has benefitted MXN”.
“Secondly, Banxico surprised the market with an inter-meeting 50bp hike while changing its FX intervention policy to a discretionary programme”.
“Thirdly, USD/MXN is the third highest correlated USD cross to changes in oil prices (after RUB and COP)”.
“We expect MXN to remain vulnerable to global risk sentiment and see it underperforming later in 2016. Some support may come from an expected 50bp of tightening from Banxico, however”.