The one-month implied volatility of the Mexican peso stands at 9.2%, the lowest since October 2021, despite the upcoming interest rate decision and a wave of more hawkish-than-expected statements from central banks across the board. the world.
The Mexican peso has the lowest implied volatility among its major emerging market peers and is more than 3% lower than that of the South African rand, Chilean peso and Brazilian real. This makes Mexico one of the top destinations for investors looking for high returns, but unwilling to face the sharp currency swings that might come with them.
The currency hit its strongest level since 2015 earlier this month and is the world’s best-performing major currency in 2023 after the Colombian peso, appreciating 13.7%. Although considered overvalued by some traders, analysts and technical indicators, the currency continued to gain ground in June.
Goldman Sachs said in a report Wednesday that the peso looks increasingly overvalued, but could strengthen to $15.10 if “misvaluation” continues.