Mexico peso on erratic path next quarter over nationalist energy push: Reuters poll

FILE PHOTO: A picture illustration shows Mexican pesos and U.S. dollars in Mexico City March 10, 2015. REUTERS/Edgard Garrido

BUENOS AIRES (Reuters) - Mexico’s peso will follow a more erratic path next quarter amid growing investor concerns about President Andres Manuel Lopez Obrador’s nationalist energy push, a Reuters poll showed.

At the end of February, the Mexican currency weakened to its lowest in almost four months, partly due to market worries over a contentious bill aimed at increasing state control of the electricity industry.

As Mexico moves to modify rules in favor of state power and oil companies, Lopez Obrador told the United States not to meddle in its domestic energy policy, reflecting a view the new U.S. government would defend investor interests.

“Recent proposals to change energy regulations may press the peso downwards in coming months,” said Ricardo Aguilar, chief economist at INVEX in Mexico City.

He forecast it to trade beyond 21.0 against the U.S. dollar at least until June.

In the survey, the Mexican currency was seen at 19.97 per U.S. dollar in one year, according to the median estimate of 17 strategists polled March 1-3, 3.6% stronger than on Wednesday but 0.6% softer than the 12-month prediction last month.

The outlook for the peso is also dimmed by Mexico’s difficulties in dealing with the coronavirus pandemic, including bottlenecks in vaccine supply and speculation among officials that wealthy countries are hoarding jabs.

A challenging health situation, the tougher economic policy approach and uncertainties regarding the outcome of Congress and regional elections in June “might keep MXN at more depreciated levels,” MUFG analysts wrote in a report this month.

In Brazil, the real was expected to gain 11.7% in 12 months to 5.10 per U.S. dollar. This week it slid to a three-month low as fears over the government’s fiscal accounts deepened.

Reporting and polling by Gabriel Burin in Buenos Aires; Additional polling by Nagamani Lingappa and Swathi Nair in Bengaluru; Editing by Bernadette Baum