Mexican Peso to strengthen against a broadly soft USD over the medium-term – Wells Fargo

Economists at Wells Fargo believe the Mexican Peso will be able to absorb decoupling from the Fed and the currency will not come under undue pressure.

USD/MXN can move toward 18.00 by the middle of this year

“Prudent monetary policy decisions and effective forward guidance should support the Peso, while broad-based USD depreciation can help the Mexican currency strengthen against greenback during the decoupling.”

“Even with diverging paths for monetary policy between Banxico and the Fed, we believe the USD/MXN exchange rate can move toward 18.00 by the middle of this year and eventually trade with a 17 handle by the end of 2023 and into 2024.”