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MEXICO: CIBC Expecting to see Increased MXN Appetite in Coming Weeks

MEXICO
EM BulletMexicoBulletGlobalEmerging Market NewsRegion
  • According to CIBC, Trump’s recent rhetoric against China’s investment in Mexico is in line with a further hit to Mexico’s growth prospects (already impacted by local reforms), which may lead to a more difficult fiscal adjustment process, and negative credit rating actions by S&P and Moody’s.
  • However, CIBC note believe that in line with the dissipation of electoral risks, and with Mexico managing to keep its investment grade status (their base case), they expect to see increased appetite for the Peso’s high carry, pushing USDMXN back towards the 19.50-20.00 range in the coming weeks.
  • Moreover, CIBC assume that the tariffs proposed by Trump against Mexico would only be used to contain China’s use of Mexico as a backdoor into the US market (Mexico has already signalled it will co-operate) and as a negotiation tactic into the 2026 USMCA review.
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  • According to CIBC, Trump’s recent rhetoric against China’s investment in Mexico is in line with a further hit to Mexico’s growth prospects (already impacted by local reforms), which may lead to a more difficult fiscal adjustment process, and negative credit rating actions by S&P and Moody’s.
  • However, CIBC note believe that in line with the dissipation of electoral risks, and with Mexico managing to keep its investment grade status (their base case), they expect to see increased appetite for the Peso’s high carry, pushing USDMXN back towards the 19.50-20.00 range in the coming weeks.
  • Moreover, CIBC assume that the tariffs proposed by Trump against Mexico would only be used to contain China’s use of Mexico as a backdoor into the US market (Mexico has already signalled it will co-operate) and as a negotiation tactic into the 2026 USMCA review.