Mexican Peso Weakens as Carry Trade Unwinds – Investment Manager Insights
The Mexican Peso (MXN) is facing a downturn as international investors move away from the Peso-favorable “carry trade”. This shift is causing the Peso to weaken, with Banxico considering an interest-rate cut in August. As a result, USD/MXN is on the rise, closing in on the June 28 high at 18.60.
According to analysts at ING Bank, the recent negative data releases, including Q1 GDP, Retail Sales, and Core Inflation, are further contributing to the Peso’s decline. Currently, one US Dollar buys 18.46 Mexican Pesos, with EUR/MXN at 20.02 and GBP/MXN at 23.78.
Analysis and Impact on Finances
The weakening of the Mexican Peso is a result of various factors, including the unwinding of the carry trade and disappointing economic data. This trend is likely to continue as Banxico moves towards an interest-rate cut in August. For investors, this means potential opportunities in trading pairs like USD/MXN, which is showing a short-term uptrend.
For individuals, the impact of the Peso’s decline can be seen in higher prices for imported goods and potentially lower returns on investments tied to the Mexican economy. It’s important to monitor the currency’s performance and stay informed about economic developments to make informed financial decisions.