Global instability raises the dollar to historic lows in Mexico
The Mexico peso this morning has depreciated to a record low driven by the fear of slowing Chinese economy and the possible rise of interest rates by the Federal Reserve of the United States. The fall of today for the Mexican currency adds to a very difficult year. This is the 16th occasion in reaching a historic low in 2015 so far.
The strength of the dollar and the Chinese instability has caused the Mexican Peso to have a major devaluation in at least the past 15 years. The US Dollar is trading at 17 pesos. The Mexican currency has lost a quarter of its value it had when President Enrique Pena Nieto took office in December 2012.
The Mexican peso await more storms. On September 4th the US is expected to release employment levels, so it is expected that the Federal Reserve to set new interest rates (which have remained between 0% and 0, 25% for seven years) on September 17. The situation could increase pressure on the Mexican currency. By then, the peso could reach up to 17.50 for each dollar, according to the economic analysis of Banco Base, Gabriella Siller.
A Chinese slowdown and the stronger dollar, added to other factors such as deepening of the Greek crisis and the fall in oil prices . The Mexico Peso has not been the only Latin American currency that has been affected by the global instability, the Chilean peso has lost at least 12% of its value so far this year and the Brazilian real by 23%.
The president of the Bank of Mexico, Agustin Carstens , said Wednesday that they will do “everything possible” so the economic instability do not increase inflation in Mexico, which is at record lows. Carstens said he is willing to raise interest rates in the Mexican central bank to keep inflation pressures, driven by the collapse of the peso. If the Fed, as expected, increased interest rates, it is expected that the Bank of Mexico do the same.