USD/MXN: Mexican Peso to weaken gradually during 2024 – MUFG

The Mexican Peso appreciated further in December. Economists at MUFG Bank analyze MXN outlook.

MXN weakening path ahead

Regarding the perspectives during 2024, considering a gradual rate cut by Banxico starting sometime in the first half of the year, and policy rate ending at 9.00%, the carry-trade return might remain attractive in times of a gradual decrease of policy rates worldwide, so giving some support to MXN. And the outcome of the presidential election is not a source of concern, as Ms. Claudia Sheinbaum from Morena party is favourite to win the presidential election scheduled for the 2nd of June, on the back of the high approval rating of incumbent president Mr. Lopez Obrador.

However, we expect gradual MXN weakening during 2024 due to some uncertainties over the economic policies to be adopted by the next administration, once although signalling economic policy continuity, the influence of incumbent president and other Morena party leaders might constrain Ms. Sheinbaum's authority. On top of that, likely, Morena party will not have the required two-thirds majority in Congress to pass reforms.