The Mexican Peso Outlook: MXN versusUSD, the currency war on the South-American border continues! Will the MXN edge out the USD? The daily forex data reflects that there are some very strong buying and selling points for both the MXN and the USD. This is due to the different economic policies in each country, the different political environments and also the different interest rates. So, how will the trade war affect the Mexican Peso Outlook?
First of all, the current economic policies in Mexico are very pro- exports. The central bank of Mexico has been buying dollars to support economic recovery and to stop the currency depreciation which has been a key to the US economy since the last decade. The central bank has made statements claiming that it is trying to keep the currency low to encourage exports. So, the Mexican Peso Outlook is primarily based on US interests.
The MXN and the USD have had a bad few months in common since the last currency war erupted between the USD and Mexico. At one point, the MXN was stronger against the USD, but since that time it has dropped in price to help support the weak dollar. The Mexican Peso Outlook is influenced by the economic policies of the Mexican government and how they attempt to stimulate their economy. The policy changes will likely help the MXN gain some ground versus the USD.
The other key economic factor affecting the Mexican Peso Outlook is the terms of trade of both countries. The two countries trade very heavily on petroleum products and oil imports. The USD/ MXN has lost ground versus most of its major counterparts including the CAN, GERD, CHF, NZD, AUS and GBP. These are strong currencies that are generally supported by a strong US economy. When there is a trade war, the USD might temporarily lose ground versus other currencies, but the impact will soon be back with stronger support for the USD. This may mean a continuation of the current trend.
The current focus on the Mexican Peso Outlook is the trade war; however, it could have long term effects on the US economy. Many economic thinkers believe that the recent trade war is having an adverse impact on the Mexican economy. Some believe that the recent drop in the USD is hurting the Mexican economy more than many others realize. These economic analysts believe that the effects will last far longer than those that occurred during the recent trade war.
If you are going to use the Mexican Peso Outlook to predict the direction of the Mexican economy, you need to be aware of the fact that economic indicators can vary considerably from month to month. There are many factors that can impact how the various economic indicators look. However, the recent drop in the Mexican Peso against the US dollar is having a significant impact on the economy of Mexico right now.
If you are going to use the Mexican Peso Outlook to determine the direction of the Mexican economy, you should also keep track of other economic indicators. Keep a look at the gross domestic product growth in Mexico. You may also want to keep track of the trade deficit between the United States and Mexico. If there is an unusually high or low imbalance between these two countries, this could also have an effect on the Mexican economy.
In addition to looking at the Mexican Peso Outlook to determine the direction of the economy, it is important to keep track of other factors that may affect the trade balance between the two countries. For example, if oil prices in Mexico are increasing, the US economy could face negative effects. Oil prices are rising because of the efforts by oil- exporting countries like the United States to reduce their consumption. Another negative factor that has recently come into the mix of the Mexican economy is the threat of a trade war between the US and Mexico over oil supplies.