The Mexican peso has recovered well after the double-whammy of the Omicron news in late November and the surprise announcement of Victoria Rodriguez Soja as the new Banxico Governor. Looking ahead, economists at ING expect the USD/MXN to trade around the 21.00 level.

Will the new Banxico governor back a big hike?

“The December Banxico meeting saw a surprise 50bp adjustment to 5.50%, helping the Peso, but 10 February is the first meeting with Rodriguez in charge. Will she back another 50bp hike?”

“Our core view on the MXN this year is that as long as Banxico keeps a 550-600bp spread over the Fed, then USD/MXN should be comfortable trading near 21.00.”

“2022 growth is expected at 2.8% (much better than Brazil) and the Mexico remittance story should remain strong.”