Chen of Sanword Securities said the Mexican peso against the yen is likely to trade in a holding pattern this week, setting an expected range of 8.9 to 9.3 yen. He cited Bank of Mexico Deputy Governor Heath's remarks that short-term additional rate cuts are not warranted and that easing measures may come about a year from now, saying expectations that a rate cut will be skipped are a strong supporting factor. On the 8th, Mexico's Finance Ministry, in a draft budget submitted to Congress, forecast economic growth of 1.5% to 2.5% for 2027 and projected that the broad public sector deficit would narrow to 3.9% of gross domestic product from an estimated 4.1% for the previous year. It also revised down its 2026 growth forecast to 1.0% to 2.0% from an initial 1.8% to 2.8%. Chen said maintaining USMCA will likely be the top priority for Mexico under the Sheinbaum administration, and while headlines over tariffs and measures against transshipment in trade talks with the United States could trigger temporary risk-off peso selling, the fundamental structure of North American supply chains will be maintained, so it is unlikely to lead to fatal peso selling.
BoM Deputy Governor Heath's remarks that near-term rate cuts are not warranted support the peso, and Mexico's fiscal/budget outlook is discussed.
