USD/MXN likely to trade around 19 by end-2017, says Lloyds Bank

The Mexican peso has reversed some of its earlier gains against the U.S. dollar. The USD/MXN pair has risen from its April low of 18.45 to consolidate temporarily above 19. Reduced crude oil prices have countered upbeat news that U.S. President Donal Trump would not immediately withdraw from NAFTA as he tries renegotiation, noted Lloyds Bank in a research report.

However, the political risk winds might blow in any direction of the border. In June, Mexico faces both congressional and presidential elections. The Bank of Mexico governor Agustin Carstens has confirmed his view that the Mexican peso was likely undervalued by 10 percent from recent levels. Until the political uncertainty cloud wanes, the risks to the USD/MXN forecast will continue to be tilted to the upside, stated Lloyds Bank.

“We forecast USD/MXN to end the year at 19.00”, added Lloyds Bank.