Monday, December 1, 2014

U.S. dollar skyrockets against sliding Mexican peso

"The open market determines the exchange rate. The price of a dollar is determined by the offer and the demand" - Finance Minister Luis Videgaray

*Updated Dec. 11*
Guadalajara -
Mexico's national currency has had a difficult year against the American dollar, and may fall further in the weeks ahead according to the country's independent central bank, Banixco.

Exchange rates today will average 13.84 to 13.92 pesos per dollar nationwide. On Friday those wanting to buy dollars paid up to 14.20 pesos in major Mexico City financial institutions.

Bank of Mexico analysts attributed the peso's decline to falling crude oil prices, and predicted the exchange rate is unlikely to fall below 14 pesos for the remainder of the year.

Banixco set the Dec. 1 exchange rate for payment of national obligations which must be satisfied in U.S. dollars at 13.9262 pesos.

Over the weekend Mexican Finance Minister Luis Videgaray put the best face possible on the peso's depreciation, which in 2014 has amounted to about 13%. "Compared with other emerging economies, it has been less. Chilean currency has dropped 15% against the dollar, and Peru's has fallen almost the same amount," said Videgaray, who is also the nation's tax collector. "Currency depreciation is a natural phenomenon in emerging nations," he added.

"As long as markets remain orderly and have liquidity, we in the Hacienda will not intervene. The open market determines the exchange rate. The price of a dollar is determined by the offer and the demand," noted Videgaray.

Dec. 8 - The Mexican Currency Exchange Commission (MCEC) announced today that beginning Tuesday, Dec. 9, it will auction $200 million dollars every day the peso loses 1.5% or more of its value against the dollar, compared to the previous day's trading. The plan is designed to inject liquidity into the market and reduce exchange rate volatility. A U.S. dollar was worth up to 14.65 pesos in Mexico City banks today, as the national currency in this country remains in free fall. Banixco and the Finance Ministry constitute the MCEC. Mexico has big bucks banked.

Dec. 9 - Banixco: bleeding peso stabilized by U.S. dollar auction

Dec. 11 - The dollar sold for up to 15 pesos in Mexico City banks at mid-day. Peso depreciation in 2014 is now approaching 13%.

Nov. 18 - Mexican Finance Minister Luis Videgaray receives more international recognition
Nov. 6 - Mexican economic analysts again dispute official 2014 growth estimate, citing violence
Sept. 26 - Mexican peso hits 2014 low against U.S. dollar

Mexico will ride out unpredictable currency waves, its Finance Minister says

© MGR 2014. All rights reserved. This article may be cited or briefly quoted with proper attribution or a hyperlink, but not reproduced without permission.

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