It is interesting to see that while the Brazilian Real has remained weak against the USD in the past 9 months, the Mexican Peso has strengthened significantly (MXN is up over 25% since its low reached in the beginning of April).
What happens to Mexico in 2021? As Brazil, the country has been deeply impacted by the pandemic, and the vaccination campaign has been running very slow (0.5 doses given per 100 people), which could lead to travel bans with some countries where the vaccination campaign has been much faster (US, UK…). With the tourism industry representing 17.5% of the country’s GDP, political and economic uncertainty is very likely to rise in the coming months, which could lead to significant MXN depreciation.
The upside gain on MXN remains very limited, while the downside risk is big; watch the USDMXN rally (i.e. MXN fall) this year !