Super Peso of Mexico Ignores Warning Signs and Touches New High

The Mexican peso has been experiencing a series of highs in recent times, despite warnings that it is becoming significantly overvalued.

On Wednesday, the peso went up by 1.4%, reaching its highest level since 2015.

This trend is not new, as the currency has already gained almost 16% against the dollar this year, making it second only to the Colombian peso in emerging markets.

It has earned the nickname of ‘super peso’ due to factors such as a delayed easing cycle and strong remittances, among others.

The Banco de Mexico is expected to keep interest rates steady, which should keep investors interested in the peso. Mexico is the most attractive bet for carry traders when adjusted for volatility and liquidity.

The Brazilian real, its closest peer in Latin America, has seen bigger swings tied to expectations of an aggressive easing cycle ahead, making it less appealing.

Mexico’s peso is expected to remain strong in the coming months, although it has been deemed to be overvalued. Structural changes, including the relocation of manufacturers to the country to be closer to the US market, have supported the currency.

The currency has also been supported by record flows of money sent home by migrants, which is around $60 billion per year. The peso is expected to slowly gain more ground through next year.

USD/MXN Short (Sell)
Enter At: 16.79904
T.P_1: 16.72270
T.P_2: 16.66387
T.P_3: 16.57628
T.P_4: 16.50
S.L: 17.00749

USD/MXN
USD/MXN
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