he Mexican peso’s world-beating six-week rally will probably stall this year as the dollar strengthens, the central bank shuns interest-rate increases and the new government struggles to implement its first budget, the currency’s three top forecasters say. Enrique Diaz-Alvarez at Ebury Partners in London, Scotiabank’s Mario Correa in Mexico City, and Rabobank’s Christian Lawrence in New York expect Latin America’s most traded currency to weaken against the dollar even after rising 6 percent since President Andres Manuel Lopez Obrador took office Dec. 1. It traded today at about 19.14.

It’s been a roller-coaster ride for the peso. Left-leaning Lopez Obrador’s rise in polls last year put pressure on the currency, yet it rallied after his landslide victory in July, then tanked anew after his decision in late October to scrap a partially built $13 billion airport in Mexico City. That set the stage for another rally after the new president submitted a well-received budget — the same proposal that some analysts say will be difficult to actually fulfill. Finance Minister Carlos Urzua now says the peso could rally to below 19. “It’s a combination of factors both internal as well as external,” said Correa, who forecasts the currency will plunge about 12.5 percent to 21.9, citing concern stemming from the airport’s cancellation. “It’s about a more complex global environment, especially financially, and internally there’s a lot of uncertainty over the impact of the new administration’s new policies.”

Ebury’s Diaz-Alvarez, who expects the peso to end the year 1.2 percent lower, sees it dropping as low as 19.7 in the first quarter before leveling out and appreciating modestly. Much of the risk stems from Banxico, the central bank, he said, noting that Lopez Obrador can name two new members to its board, which would mean a more dovish turn for the normally hawkish institution.

“We expect to see a dovish turn in Banxico, either through appointments or political pressure,” Diaz-Alvarez said. Then there’s the dollar to consider. While strategists including ING’s Chris Turner say the peso could hold up this year, Rabobank’s Lawrence sees further strength in the greenback, particularly if the Federal Reserve defies conventional wisdom and hikes rates again in March. “The bullish drivers are fading, but FX is a two-currency story and it’s hard to take a strong view on what to sell” against the dollar, Lawrence said.

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