Mexican Peso 2017-2020

 

 The Mexican Peso wasn’t having a great couple of years anyway. But the election of Trump in early November 2016 really damaged it. Indeed it dropped almost as much in 2 months as it had in the past 2 years.

 2017

Despite a small recovery in January 2017, versus the US Dollar the currency is now worth 50% less than in early 2015. Although there is now a period of uncertainty regarding the timing of any US initiatives, there is nothing to suggest that the Peso’s situation will improve significantly in the next month.

 March to May sees likely further falls as lack of clear future direction for the country’s economy sees investors look elsewhere. Significant volatility is also possible now

June to August sees the pressure lifting somewhat. While I don’t expect any big rises there may at least be some support on the downside. However the volatility may continue.

September and October, on the other hand, see a return to the conditions of March to May. Although there are some longer term stabilising influences, the short terms ones are more tricky. Not a disastrous time for the currency but not a good one either.

November and December may see at least some support though. It isn’t a positive time but at least some of the confusion may have abated and the volatility reduced to small adjustments.

2018 

January and February 2018 see us once more in weakness territory. Despite possible positive interventions it’s another poor period for the Peso.

March to May however is better. There is a focus on the currency now and although there are pressures some of the uncertainty has been lifted for a while.

Despite another short term element of volatility there is definite support for the currency now. Policies seem to be working.

June to August may be one of the best times in the  period to date. A combination of announcements/rates and optimism mean that the balance is positive now. However we aren’t looking at a big recovery just a small upturn in value.

September and October, unfortunately see the old conditions resurfacing, There may still be some positive interventions though and the overall position     while weak may not be as negative as earlier.

November and December continue the themes. There is a great deal of activity in the currency particularly in the middle of this period.  

2019 

January and February 2019 also see a continuance of the themes but the impact is weaker. Now there is definitely some upside and the buyers and sellers look like they are fighting it out so there is no clear long term trend yet- indeed it may rise versus some currencies and fall versus others.

March through to June is also broadly positive. Indeed any movements In value may be bigger than expected as investors overreact.

 But there are some major changes happening now in the background that will alter the currency permanently.  It is unlikely these will manifest yet but we may see their impact before 2020 is out.

July to September is another period when the currency will probably end up much where it started as once more we see the positive and negative sentiments more or less cancelling each other out. There are however some significant structural changes beginning in the currency now.

October and November are actually relatively calm months. Some potential weakness is offset by support. Trading is generally constrained but occasionally there may be central bank trades which boost the currency.

December is a very quiet month. Although there are a lot of minor events there Is little major happening. The only interesting time is right near the year end when significant increase in  money supply could lead to some weakness.

2020 

2020 is another kettle of fish altogether.

Trade seems to be highly managed from the beginning. There are some positive indicators but there are also shocks. Difficult to establish whether this means significant weakness or whether actions taken will protect the currency from the worst.

March to July sees the themes continuing. And the picture looks very mixed. It is worth noting what happens now as this will be a forerunner to events in December.  What appears clear is that this currency is being shaken out of its slumber and is changing its nature profoundly.

August and September see further changes but on balance the currency looks protected now, albeit through quite deliberate actions.

October and November see this reaching a peak and accompanied by changes to rates or even physical currency.

This leaves December. And this is one of the most interesting months for the currency of the whole period. Actions continue and it appears that the currency is radically changed in structure by the end of the year.