Economists at ING think the Mexican Peso’s bullish momentum may have further to run.

25 bps hike by Banxico, and maybe a break below 18.00

“Today, Banxico will announce monetary policy and we expect a 25 bps rate hike to 11.25%. “Market pricing suggests investors have already scaled back expectations for additional Banxico tightening beyond today’s hike. If anything, leaving the door open for more tightening if needed as the Bank reiterates its resolution to fight inflation might see some positive impact on the MXN.”

“We think MXN remains attractive in an environment where markets favour currencies with high carry and positive exposure to rebounding crude prices.”

“A break below 18.00 in USD/MXN may be on the cards soon, potentially today on a hawkish surprise by Banxico.”