Upcoming USMCA Talks Could Boost ѱ澱’s Peso
But Questions Remain About Transshipments
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ѱ澱’s upcoming trade talks with the U.S. and Canada could help the peso — a top emerging-market performer this year — reach lofty heights last seen in 2024, according to the currency’s top forecaster.
There’s a “lot of upside for Mexico” ahead of a review of the United States-Mexico-Canada Agreement, slated for next year, said Jason Schenker, president at Prestige Economics. A refreshed pact could boost investor confidence and bolster demand for Mexican exports, which supports the peso.
The currency surged on Oct. 8 following comments from President Claudia Sheinbaum about trade talks with the U.S.
A positive trade deal could push the peso to 17 per dollar in the next year and a half, Schenker said. That would represent gains of more than 7%, bringing it to a level not seen since mid-2024. He sees the currency ending the year at 18.35, largely in line with the current exchange rate.
READ MORE:Mexico Risks New Tariff Hit on $15 Billion of Truck Exports
Schenker oversees forecasts at Prestige, which topped Bloomberg’s ranking of FX prognosticators for a second quarter in a row in addition to being the best predictor for the peso.
Mexican Peso Last Hit 17 in Mid-2024
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The currency has gained 10% since April 2, beating most emerging-market peers amid optimism around ѱ澱’s prospects in President Donald Trump’s trade war. The country’s exports to the U.S. rose 8% annually as of July, and it faces lower tariffs than other U.S. trade partners thanks to USMCA, according to Deutsche Bank AG research.
The peso has also been helped by a strong domestic economy with low unemployment, according to Schenker.
While questions remain around transshipments — when goods are rerouted through lower-tariff countries — Schenker said “ѱ澱’s going to be a very big winner” when the trade pact is renegotiated.
The peso “is artificially weak” right now, he said. “We’re in a holding pattern.”
