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USD/MXN: One Bank Sees The Mexican Peso Losing Around 9% Vs US Dollar - FX INSIGHTS
Foreign currency strategists at Crédit Agricole expects gradual Mexican Peso depreciation throughout 2027, despite recognising the support that higher yields give emerging-market currencies.
The Mexican Peso is among the currencies Crédit Agricole expects to weaken even as much of the emerging-market sector withstands higher US interest rates.
The bank forecasts the US Dollar to Mexican Peso exchange rate (USD/MXN) at 18.00 in December 2026, rising to 18.25 in March 2027 and 18.50 in June.
Its targets then reach 18.75 in September and 19.00 in December 2027.
Against the bank’s 22 September reference rate of 17.27, the final target implies a 10% rise in USD/MXN, equivalent to roughly a 9.1% fall in the Peso’s Dollar value.
Crédit Agricole explicitly separates Mexico from its more favourable regional views:
“From an FX regional angle, we expect a slight appreciation of Asia vs the USD, and of CE4 vs the EUR, but expect more weakness in Latam (the COP and MXN in particular).”
Higher yields offer support, but currency losses remain a risk
The bank acknowledges that emerging-market currencies have resisted pressure from rising US yields:
“Since the beginning of July, the US 10Y yield has increased by about 60bp. Yet, during the same period, our EM FX index appreciated vs the USD.”
On the interest-rate advantage over the US, it adds:
“Third, the average EM-US carry gap has remained decent, in spite of the recent increase in US short-term rates. This is because higher oil prices have also put a floor under EM short-term rates.”
Even so, the bank cautions:
“We do not expect a full-fledged appreciation of EM FX vs the USD.”
For Mexico, Crédit Agricole forecasts the policy rate remaining at 6.50% through December 2027, matching the current rate in Banco de México’s official figures.
The distinction between interest income and currency performance also featured in Rabobank’s warnings about Peso carry in May.
Our reading is that attractive yields alone do not invalidate Crédit Agricole’s forecast: investors can collect interest while losing value when Peso holdings are converted back into Dollars.
