MXN: Time To Talk Up The Peso

The Mexican peso shrugged off early losses on July 6, suggesting the currency remains largely unscathed by the government's poor performance in July's mid-term congressional elections. The resilience of the currency in the face of the swine flu outbreak, dire economic readings and the possibility of a lame duck president until 2012 has been impressive, in our view. With economic activity now looking like it could be set for a moderate recovery in H209, we see the potential for a period of appreciation back towards the MXN13.00/US$ level, a break of which we would take as a bullish signal.

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