The fall in the value of the dollar over recent months in anticipation of a Federal Reserve rate cut in September might have been expected to benefit the Mexican peso, Brazilian real and Chilean peso. However, both USD/MXN and USD/BRL have experienced rallies in the second half of August.
There are various factors behind this. Pete Mulmat, chief executive of tastyfx, notes that the Mexican peso has seen steep depreciation, with USD/MXN rising over 3% in the past week as a slowdown in production and potential consequences of November’s US elections shake confidence.
Eric Robertsen, head of global research and strategy at Standard Chartered, says: “The market reacted with concern to the Mexican election results as the margin of [incoming president Claudia] Sheinbaum’s victory was not expected and nearly left [political party] Morena with a qualified majority in both chambers.
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