UBS Boosts USD/MXN Forecast to 17.50 Amid Interest Rate Support

UBS has increased its year-end forecast for the USD/MXN exchange rate to 17.50 from 17.20, citing interest rates as a supporting factor for the Mexican Peso.

The revised forecast comes after a difficult week for the Peso, with data showing a rise in the USD/MXN exchange rate from 17.2252 on September 21 to 17.6932 on September 25.

Despite this, UBS still sees some recovery in the Peso rather than further depreciation, as its new December target sits below the reference rate of 17.6932.

The bank's analysts also expect Mexican policymakers to resist following the Federal Reserve's interest rate decisions and hold rates at 6.50% through 2026, prioritizing domestic conditions over policy stance relative to the Fed.