USD/MXN likely to trade around 18.10 by end-2017, says Lloyds Bank

The USD/MXN pair dropped below 18 for the first time since last August, noted Lloyds Bank in a research report. Yet there are indications that the currency pair is prepared to settle within its recent trading range of 18.0-17.5. It is not surprising given the political risks on both sides.

For Mexico, the next major political events are the congressional and presidential elections in June 2018. Since the currency pair is one of the most heavily trading emerging market currencies, it is already predisposed to be sensitive to shifts in global risk sentiment, stated Lloyds Bank.

The Mexican peso still seems to be modestly undervalued, but political risk is expected to leave volatility in the pair elevated over the forecast period. Similarly, the risks to the projections are tilted to the upside. According to Lloyds Bank, the USD/MXN pair is expected to trade around 18.10 by the end of this year at around 17.75 by the end of next year.

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