Strategist at Rabobank Christian Lawrence sees the Mexican Peso losing further ground in the next periods.
Key Quotes
“Although we remain constructive of the Mexican economy relative to much of the EM world, as we have noted before, exogenous factors are currently more important for MXN than domestic developments”.
“As such we do expect to see USD/MXN rally once more. MXN’s proxy hedge role has not been eliminated and the currency is still cheap to short relative to the rest of the region”.
“We remain cautious as to the global growth environment and suggest that we will see extended ‘risk-off’ periods. In addition, the problems facing Brazil which we do not think will ease this year, coupled with concerns over growth across commodity producers in general will all weigh on MXN”.
“In terms of domestic risks, Mexico’s fiscal slippage is key as bond flows have been relatively stable thus far. If outflows begin, however, MXN weakness could extend notably”.
(Market News Provided by FXstreet)
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