Friday, September 26, 2014
Mexican peso hits 2014 low against U.S. dollar
*Updated Oct. 16*
It'good news for American expats and U.S. travelers, but generally bad news for the Mexican on the street.
Measured against the dollar, the peso hit its 2014 low today according to Banixco, the nation's central bank.
Holders of pesos who wanted to buy dollars had to hand over as much as 13.74 in major Mexico City banks - but of course such transactions affect few Americans. In the more typical scenario, those who visited their local ATM machine to withdraw pesos against a U.S. bank account received an average of 13.45 pesos per dollar - one of the best exchange rates since 2012.
Bank of Mexico analysts blamed it partially on a number of pending U.S. Federal Reserve decisions which will be made by early 2015, the uncertainty of which is spooking investors, causing them to steer their money into cash accounts and instruments which offer complete liquidity until financial doubts are resolved.
As MGR noted at the close of 2012, "Parking money in greenbacks is the safe haven sought by many investors until the financial dust settles. That, in turn, pushes the dollar upward." At least that's the way it's supposed to work, according to economic experts. Dollar falls unexpectedly against Mexican peso as U.S. goes over fiscal cliff (Dec. 31, 2012).
But Banixco added in its statement today, "Continued worries about the state of the global economy, the probable consequences of geopolitical sanctions [e.g., U.S. economic sanctions against Russia], and the low volume of transactions has created a market environment with an aversion to risk, and the peso-dollar exchange rate is likely to remain volatile." In this case, "volatile" may well mean that the peso could fall yet further in the weeks ahead.
Oct. 16 - "Due to continued investor uncertainty in world economic growth, the U.S. dollar today sold for 13.57 pesos in Mexican markets, its highest exchange rate since June 2012," reported Mexico's Central Bank (Banixco) today.
Dec. 1 - U.S. dollar skyrockets against sliding Mexican peso
Sept. 9 - Mexico rolls out low earner tax plan to stimulate anemic economy
Aug. 19 - Mexico has big bucks banked - mostly greenbacks
Aug. 13 - Mexican economy remains stuck on a southbound train
Jan. 1 - Dollar ends 2013 stronger against peso than it did in 2012
© MGR 2014. All rights reserved. This article may be cited or briefly quoted with proper attribution or a hyperlink, but not reproduced without permission
at 8:21 PM