5 Mar 2015
Positive stance for the MXN in the medium/long term – BAML
FXStreet (Edinburgh) - Analysts at BAML expect the Mexican peso to gather traction in the next periods.
Key Quotes
“The market and consensus expect the US Federal Reserve to start hiking the Fed Funds Rate later this year”.
“Interest rates in Mexico are likely to increase as a result because Mexico is an open economy with no capital flow restrictions. Mexico is a net debtor in international markets and an increase in US interest rates will imply Mexico will have to use more resources to pay for its debt service, reducing domestic aggregate expenditure”.
“Since there is a risk that the hiking cycle in the US is accompanied by portfolio outflows from emerging markets, Mexico’s bonds and FX could suffer important volatility bouts in the following months”.
“We are bullish the Mexican peso and expect activity in the US and Mexico to strengthen significantly this year”.
“The exchange rate has overshot recently due to oil price declines and is now undervalued relative to economic fundamentals. The central bank will start tightening monetary policy in the second half of the year”.
Key Quotes
“The market and consensus expect the US Federal Reserve to start hiking the Fed Funds Rate later this year”.
“Interest rates in Mexico are likely to increase as a result because Mexico is an open economy with no capital flow restrictions. Mexico is a net debtor in international markets and an increase in US interest rates will imply Mexico will have to use more resources to pay for its debt service, reducing domestic aggregate expenditure”.
“Since there is a risk that the hiking cycle in the US is accompanied by portfolio outflows from emerging markets, Mexico’s bonds and FX could suffer important volatility bouts in the following months”.
“We are bullish the Mexican peso and expect activity in the US and Mexico to strengthen significantly this year”.
“The exchange rate has overshot recently due to oil price declines and is now undervalued relative to economic fundamentals. The central bank will start tightening monetary policy in the second half of the year”.