Banxico will start to cut rates this year, and we expect at a more rapid pace than the Fed, but FX is a relative game, and the rest of the LatAm region has already started cutting rates, so MXN remains relatively attractive compared to the rest of the region. When adjusting for volatility and liquidity, we still view MXN as the most attractive carry currency in the world.

Although we see some potential weakness against USD later in the year as Banxico’s rate cuts get underway, we expect MXN to outperform most of its EM peers.