No Relief in Sight for the Mexican Peso Says Top Forecaster

  • Economic slowdown in China to weigh on most-traded EM currency
  • Rise of protectionism may hit peso, Barclays’ Jaime says

The best forecaster of the Mexican peso expects it to weaken at least 8 percent more this year as China’s growth slows and the U.K.’s vote to leave the European Union weighs on appetite for riskier assets.

That is even before factoring in the possibility that Donald Trump wins the U.S. presidential election, according to Barclays Plc analyst Andres Jaime, the most accurate forecaster of the dollar-peso exchange rate over the past six months among 27 economists surveyed by Bloomberg.

The most-traded emerging market currency in the world fell 0.3 percent on Friday to 18.3411 per dollar at 3:08 p.m. in New York, leaving it down 6.2 percent this year, the worst performer among major currencies tracked by Bloomberg after the British pound.

Jaime, 31, is the fourth-most bearish forecaster in the survey. He expects the peso to slide to 19.7 per dollar by the end of the year. The depreciation, he says, will be likely due to a slowdown in the Chinese economy and the rise in anti-free trade sentiment on both sides of the Atlantic as Trump vows to renegotiate deals and after the U.K.’s vote to leave the EU.

“A vote to exit the European Union could mark the beginning of the end of the union,” said Jaime, as governments in other countries could call for similar referendums or look into revising trade agreements. Rising uncertainty would weaken the currency, he said.

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