Morgan Stanley Sees Better Odds of Mexican Peso Intervention

The likelihood is increasing that Mexico’s central bank will step in to stem the peso’s depreciation as the U.S. moves closer to raising interest rates, according to Morgan Stanley.

History suggests that policy makers will allow the currency to weaken a further 3 percent before acting, Morgan Stanley strategists including Gordian Kemen in New York wrote in a research note published Monday. Citigroup Inc. said intervention will probably occur as volatility increases.