The Mexican peso is expected to underperform
most of its peers in the emerging markets, according to a survey of FX
corporate and sales executives, traders and strategists attending Bloomberg’s
FX16 Symposium found.
Out of more than 120 respondents, some
57% said that “the peso (MXN) will continue to lag against its emerging market
counterparts and is poised for further declines by year-end,” Bloomberg said in
a statement Wednesday.
Some 19% said that the Mexican currency´s
losses have been excessive, but they expect it to recover; while 11% said the
MXN will end the year with little changes.
The US Federal Reserve hiking rates was
the main economic factor impacting the MXN, according to 54% of people polled,
with 14% pointing at commodities’ prices and 7% at the Chinese economy.
However, the poll was conducted on June
22, before the UK referendum on leaving the European Union which found the
majority of Brits wish the UK to exit the EU. With uncertainty over how things
will develop moving forward, media reports came out over the week suggesting
the market is now expecting the US Federal Reserve to actually cut, rather than
raise, interest rates.
Meanwhile, the Bloomberg poll found that
for 45% of respondents, the MXN is undervalued and its fair value should be
between 15 and 17 pesos per USD.
Asked about actions taken by the Mexican
central bank, Banco de Mexico, to contain MXN volatility, 37% said USD auctions
“have helped short term stabilisation, but are not effective for the currency´s
medium and long term”, while 35% said the intervention has had a marginal
impact, and 23% said it has had little effect. Only 5% of the respondents said
that Banxico has been a crucial player in supporting the MXN and mitigating volatility.