BRL and MXN to remain at strong levels against the Dollar – Commerzbank

FXStreet Insights Team FXStreet

The Brazilian Real and the Mexican Peso benefited from the signal of a pause in US interest rates. Economists at Commerzbank expect both currencies to remain strong against the US Dollar.

BRL and MXN remain attractive

“Both central banks have been so hawkish of late that I think the Fed's rate pause was a necessary condition for the BCB and Banxico to consider moving away from their ultra-hawkish stance. Given the high real interest rates in Brazil and Mexico, slightly lower policy rates seem justified.”

“However, with inflation still elevated, both central banks are likely to be careful to keep monetary policy sufficiently tight to avoid the risk of additional inflationary pressures from a weaker currency. Accordingly, we see the BRL and MXN remaining at strong levels against the Dollar.”

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FXStreet Insights Team

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