Mexico: Banxico intervention risk rising – TDS

Sacha Tihanyi, Senior EM Strategist at TD Securities, suggests that the MXN trading conditions, relative to a set of indicators, suggest that the peso is in the midst of becoming “unhinged” again, in much the same way that led Banxico to unexpectedly intervene in the FX market and hike rates in February.

Key Quotes

“ We believe that if current trading conditions persist long enough (2 to 3 more weeks) Banxico will likely move to intervene in USDMXN, though we expect that a rate action is much less likely (outside of a move with the Fed), given domestic economic risks.”