FXStreet (Córdoba) - Analysts from Brown Brother Harriman, note that despite the fundamentals of the Mexican economy, the peso (MXN) continues to underperform even during the recent bounce in Emerging Markets (EM). Key Quotes: “Despite having decent fundamentals, the Mexican peso continues to underperform. Oil prices and general EM sentiment will likely remain the most important drivers for the peso and in that regard, the outlook remains cloudy.” “The Mexican economy remains sluggish, dragged down in part by low oil prices” “Petroleum exports remain weak, but more worrisome is the fact that non-petroleum shipments have weakened too recently (…) The correlation between oil prices and MXN has strengthened.” “The peso has generally underperformed within EM, and this should continue. In 2015, MXN lost -14% vs. USD. This compares to the worst performers ARS (-35%), BRK (-33%), ZAR (-25%), COP (-25%), RUB (-20%), and TRY (-20%). So far this year, MXN is down -7.1% YTD, behind only RUB (-7.2% YTD) and ARS (-8.4% YTD).” “From a shorter-term viewpoint of this recent EM bounce, MXN has disappointed once again. While other EM currencies were retracing 50-62% of their December-January drops, the peso only got as far as its 38% retracement objective. With this latest slide in oil, a break above 18.5360 for USD/MXN would signal a test of the all-time high near 18.80 from January 21.” “We believe this is a major factor behind MXN underperformance during times of EM stress. Recently, EM has seen a bit of a bounce due to the ECB and BOJ signals. We have always viewed this bounce as a temporary one, within the medium-term EM bear market that we believe remains intact.” For more information, read our latest forex news.