Rabobank Forecasts USD/MXN to Rise to 17.9 as Peso Carry Appeal Fades

Rabobank now expects USD/MXN to climb to 17.9 in three months and 17.8 in twelve months as the peso’s carry-trade appeal fades. This follows the May 28 report of marked indecision near yearly lows around 17.35, where the pair moved just 0.5% in five sessions despite Banxico’s 6.5% policy rate versus the Fed’s 3.75%. Key drivers cited by the bank include narrowing global rate differentials, Mexico’s Q1 GDP contraction of 0.8% q/q, and reduced speculative long positions, with Banxico seen holding rates at 6.50% through year-end.