We remain constructive on the Peso relative to forwards and expect it to trade within the 16.40-18.11 range in the coming quarters. 

Political developments will be key to watch for the Peso heading into the Presidential election in June 2024.

At its latest June MPC meeting, Banxico left the policy rate unchanged at 11.25% and pledged to maintain rates at current levels for ‘an extended period’ of time. This, in our view, means status quo until year-end. We expect rate cuts to start in 1Q24.