Investors like the high carry in Mexico, the well-run economy and the exposure to surprisingly strong US growth so far this year. Indeed, worker remittances back to Mexico hit a record $5.7bn high in May.

Banxico is promising an extended period of high rates (currently 11.25% policy rate), but will probably cut with the Fed in the first quarter of 2024.

Politics looks the only shadow over the strong peso story, with Mexican elections next June and US elections next November. For the time being, however, expect MXN to hold gains.

USD/MXN – 1M 17 3M 17 6M 17 12M 16.50