Guadalajara -
In difficult economic moments, the world still turns to U.S. dollars - even when those difficult economic moments are playing out on American soil. It may sound illogical, but that's what happens. Parking money in greenbacks is the safe haven sought by many investors until the financial dust settles. That, in turn, pushes the dollar upward. It's welcome news for those who spend dollars (converted into pesos) here.
With no deal likely to be reached today in Washington, the dollar should have risen significantly against the peso. Fortunately for Mexico's government, it owns about 160 billion of the former, as a hedge against volatile currency markets. The Mexican on the street would have definitely felt pain in the days ahead, however. But by day's end what was supposed to happen simply didn't.
The reasons are unclear. A currency conversion website reported that the English language news service China Daily ran an economic opinion piece today contending the U.S. economy will grow 8% in 2013, instead of the (maybe) 3% which most financial experts have been forecasting for months. (Whoever wrote that opinion piece was surely drinking plum wine instead of green tea at the time.) In any case the website suggested that since the U.S. economic horizon is arguably not quite as bleak as some have contended, even with the fiscal cliff looming the dollar failed to rocket upward as it has several times earlier this year (see posts below).
Fears affect major currencies. With a jittery U.S. stock market and no deal in Washington - nor any guarantee even tonight that an accord will be reached - the dollar should have hit well over 13 pesos today, both for buyers and sellers. It didn't.
At the close of the banking day those wanting to buy dollars had to pay 12.85-13.04 pesos for each, and those wanting to exchange their dollars for pesos (typically tourists and/or foreign residents) got about 12.25 pesos per greenback. The difference is the spread, and that's why bankers are rich.
Late today El Universal reported that at the Mexico City airport, dollars were selling for 13.75 pesos. That probably evidences avaricious money changers more than it does market conditions, however.
Jan 10, 2013 - The dollar continues its slow downhill ride today, closing at 12.61 pesos.
Jan. 1, 2013 - Mexican stock market beat U.S., London, Brasil in 2012
Dec. 28, 2012 - Mexico pays enormous price for domestic insecurity
Dec. 18 - If U.S. goes over the fiscal cliff, the dollar will soar
May 31 - Enrique Peña Nieto falling; U.S. dollar soaring
May 24 - U.S. dollar continues to pound Mexican peso
Aug. 23, 2011 - U.S. stands At The Edge Of The Precipice
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