Mérida, Yucatán — Election-related volatility could bring a return of the 20-dollar peso, predicted the local president of the National Chamber of the Industry of Transformation, Juan Manuel Ponce Diaz.
The dollar reached a price of 19.25 pesos in what was the worst fall of the Mexican peso since Donald Trump won the U.S. presidential election in November 2016.
Mexico’s peso is suddenly the worst performing major currency as investors begin to accept that the next president is likely to be Andres Manuel Lopez Obrador, the populist firebrand they feared, Bloomberg and other financial media report.
Sunday’s debate lacked substance and was met with ridicule and farcical memes from the public, complained Ponce Díaz.
“Unfortunately people are distracted by the elections and do not focus on seeing the major problems of the country resolved,” said Ponce Díaz in Diario de Yucatán. “Fortunately, in Yucatán we would not have such a large impact compared to other states in the north because our economic dependence is not much like theirs, but we must prepare to open a market in other countries because there will be some damage to them as Trump has to show to his electorate that he achieved some advantages. ”
Ponce Diaz predicted more volatility in the exchange rate until after the July 1 election.
“It can exceed 20 pesos a dollar, if it can and is dangerous for the economy,” he acknowledged. “If the population continues to feel insecure in economic and monetary policy because of what the candidate AMLO (Lopez Obrador) has proposed, the dollar may exceed 20 pesos this year.”
This comes after the peso posted the biggest global gains in the first quarter amid optimism the country would reach a favorable outcome in trade talks with the U.S. and Canada.
In the past two weeks, the peso has weakened from as high as 17.93 per USD to 19, where it landed this morning (Wednesday).
“Our calculations suggest that further weakness in the peso is very much likely,” readers of EconoTimes were advised.
In 2017, the peso at one point reached 22 per USD, which is what traders were told to target today.
