Mexican Peso: UBS analysts have revised their expectations for the Mexican Peso (MXN) downwards. Against the backdrop of a rise in the USD/MXN rate of almost 1.5% over the week, the bank raised its forecast for the end of the year from 17.20 to17,50. However, the bank still relies on carry trade strategies, relying on high yields in Mexico.
Mexican peso: Bank forecasts: UBS vs Goldman Sachs
The UBS revision comes after the uSD/MXN Pair jumped from17,2252(September 21) until17,6932(September 25).
| Bank | 3 months | 6 months | December 2026 | 12 months |
|---|---|---|---|---|
| Goldman Sachs | 16,75 | 17,00 | — | 17,25 |
| UBS | — | — | 17,50(was 17.20) | — |
| UBS (2027) | — | — | — | 17,20 |
- UBS:Reduced expectations for the peso's recovery in the short term. New goal for December (17,50) is still below current levels, suggesting some strengthening in MXN, but much slower than previously expected.
- Goldman Sachs:Remains more aggressively optimistic, expecting the rate to fall to16,75in just three months
Carry Trade: peso major support
Although the global rise in yields has narrowed mexico's Advantage, UBS remains positive on the currency.
- Rates:The Bank of Mexico (Banxico) keeps rates at6,50%.
- Regulator position:UBS expects Banxico to keep rates unchanged through 2026, prioritizing domestic conditions rather than mechanically following the Fed.
- Profitability:The bank notes that the global backdrop remains favorable for carry trade strategies, which supports the currency's high yield.
Risks: US and trade disputes
UBS sees two main threats to the peso:
- US economic Slowdown:If US growth slows more than expected, it will hit the peso.
- USMCA Agreement:Any trade disputes under the US-Mexico-Canada Treaty will put pressure on the currency.
On the other hand, positive signals from the US President or the desire of investors to hedge interest rate risks could strengthen the peso. However, the bank warns that if the peso falls too much, it could wipe out all the returns from the carry trade.
Outcome:UBS and Goldman Sachs temporarily disagreed. Goldman is betting that the peso will quickly strengthen16,75, while uBS, recognizing the Strength of the carry trade, lowered expectations to17,50by the end of the year, fearing the impact of the US economy and trade wars.