USD/MXN to head gradually higher toward 18.70 in Q2 – TDS
Banxico delivered a 25 bps hike, in line with the forward guidance it offered in February. The MXN reacted with a 0.4% depreciation towards 18.12 immediately after the announcement. The decision is in line with TD Securities’ expectation of a weaker MXN in the three-month horizon.
Banxico delivered what was promised
“Banxico hiked the policy rate in 25 bps, in line with our expectation and its forward guidance offered in early February. Despite lack of explicit acknowledgment by the central bank, we think the central bank has reached terminal at 11.25%.”
“Looking forward, the combination of Banxico stopping its hiking cycle and a repricing of idiosyncratic factors is behind our USD/MXN expectation of gradual weakening towards 18.70 in Q2.”