The Mexican Peso (MXN) has now delivered year-to-date total returns of 5.36% against the mighty US Dollar (USD). Economists at ING analyze MXN outlook.
The total return hero
We had thought Banxico might push back against Peso strength when it cut rates last week. Yet Banxico's statement (unlike the SNB's) did not single out a strong currency as an influential factor, and the market has been happy to press ahead with Peso positions.
We suspect the strong Peso will enable Banxico to deliver a consistent path of rate cuts and expect more receiving pressure to emerge in Mexican two-year TIIE swap rates, which are now trading around 9.75%.
