Barclays sees rosy outlook for Mexican peso in 2023 By Reuters

By Valentine Hilaire

MEXICO CITY (Reuters) – The Mexican peso may shut 2023 at 19.00 vs the U.S. greenback, Barclays (LON:) analysts mentioned on Friday, citing well-financed public accounts, applicable actions taken by the nation’s central financial institution and advantages from nearshoring.

The peso-dollar alternate fee would ease 4.15% from its present ranges if the forecast is met.

“Fiscal austerity, Mexico’s attractiveness for nearshoring and a shrinking funding universe, as Russia is now not an possibility and Chinese language politics are posing worries, are components making Mexico seem like sweet,” Gabriel Casillas, Barclays’ chief economist for Latin America, mentioned at a information convention.

Barclay’s forecast paints a extra optimistic situation for the emerging-market forex after a Moody’s (NYSE:) analyst predicted a 20% depreciation unfold by way of late 2022 and 2023 and even into 2024.

Requested in regards to the Moody’s prediction of a coming correction, Barclays analyst Erick Martinez famous his “clear disagreement” with it.

Martinez famous the Mexican peso may expertise episodes of volatility if financial troubles deepen at first of 2023, however would regain enticing ranges as central banks ease their financial insurance policies.

“The greenback is overvalued exactly as a result of the U.S. Federal Reserve’s financial coverage may be very restrictive,” he added. “Because it relaxes, the greenback will return to its truthful worth. I do not see the greenback changing into stronger in a context of disaster in the USA.”

Barclays additionally projected Mexico’s financial progress for 2023 at 0.9%, down from the two.5% anticipated for 2022, following a attainable international financial recession in the course of the first two quarters of 2023.

The agency famous Mexico will expertise no progress in the course of the first quarter of 2023 and can hit a destructive 0.1% advance in the course of the second quarter.