Mexico | Strong MXN?

Summary

The MXN has reached 17.55 pesos per dollar, its lowest level since May 2016. This latest movement of appreciation was triggered by the publication of the inflation number for April in the United States, which reinforced the perception that the cycle of increases of the Federal Reserve has finished.

Key points

• Key points:
• During the last 18 months, the MXN has overperformed the rest of currencies of large emerging countries because Mexico has lower fiscal vulnerabilities, does not show significant external imbalances, and has a high level of short-term rates.
• Despite the recent appreciation movement, the MXN is not overvalued; in real terms, it is more depreciated than practically the entire 2000-2015 period.
• The better performance of the peso against other emerging currencies will likely continue. However, it could depreciate slightly against the dollar in the coming months.

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