Investor confidence for emerging markets continues to mainly drive capital flows to Mexico. High volatility in Q1 has impacted the Mexican currency. Disorderly adjustments in the financial markets of China mainly drove the high volatility during the first quarter of 2016.
The value of the Mexican peso will be shaped by the interest rate differentials between the US and Mexico, changes in crude oil prices and the value of the USD, said Scotiabank in a research note. Irregular global economic growth, along with t he electoral cycle in process in the US might weaken the US Fed’s process of monetary policy normalization, directly impacting the Mexican peso in the coming months.
