Foreign Exchange Forecasts

Research evidence excerpt

Foreign Exchange Forecasts

25 June 2026 Citi Research

Figure 34. SA: Historical inflation plus Citi forecasts

© 2026 Citigroup Inc. No redistribution without Citigroup’s written permission.

Source: Citi Research, Bloomberg

MXN

Julio Ruiz

USDMXN Forecasts: 0-3m 17.43, 6-12m 17.40

Banxico is holding its policy rate at 6.50%, with its board viewing activity weakness

and a resilient peso as sufficient disinflationary forces to keep rates on hold

through year-end. Despite a complex environment, expectations for the Mexican

peso have strengthened aligned with generalized weakness in the USD. However,

significant headwinds are building. The path to the USMCA's renewal is

increasingly uncertain, with negotiations extending beyond the July 1st deadline.

The growing probability that the review extends into 2027, coupled with a more

hawkish U.S. Federal Reserve, creates a challenging external environment.

Domestically, the economic recovery rests on fragile foundations, with weak

consumer demand, a challenging fiscal outlook, and a complex political landscape,

which collectively cast a shadow over the peso's resilience.

BRL

Leonardo Porto, Paulo Lopes, Thais Ortega

USDBRL Forecasts: 0-3m 5.15, 6-12m 5.40

Softening of geopolitical tensions that led to lower oil prices amid stronger USD

drove the USD/BRL back to 5.15 (from 5.0), making us to forecast exchange rate to

hover around this level in the near-term. Looking ahead, the risks on the external

front remain related to future developments of the geopolitical tensions and

stronger USD, while the Presidential election period should gain relevance in

coming months on the domestic front. We continue seeing a moderate

depreciation of the BRL at 5.40 in the 12M horizon (from 5.35).