Thread: Mexico's Peso Closes at Record Low Vs $ On Economic Worries

Mexico's Peso Closes At Record Low Vs Dlr On Economic Worries

Mon, Mar 2 2009, 20:33 GMT
http://www.djnewswires.com/eu

Mexico's Peso Closes At Record Low Vs Dlr On Economic Worries

By Anthony Harrup

Of DOW JONES NEWSWIRES

MEXICO CITY (Dow Jones)--Mexico's peso sank to a new all-time low against the dollar Monday, triggering central bank dollar sales as pessimism about the world economy and financial-sector worries fueled risk aversion.

The peso was quoted in Mexico City at MXN15.4550 to the dollar around 3:15 p.m. EST. The Bank of Mexico's cut-off reference, at 2:30 p.m. EST, was MXN15.43 to the dollar, its weakest ever.

The peso remains under selling pressure despite central bank interventions in the market, including $400 million sold at an auction Monday at an average exchange rate of MXN15.3773.

Already negative sentiment was made worse by last Friday's downward revision to U.S. gross domestic product for the fourth quarter of 2008 to a drop of 6.2%. That was followed Monday by news the U.S. government will put up more money to support insurance concern AIG, which lost more than $60 billion in the fourth quarter.

"The contraction in economic activity of our principal trading partner implies less foreign currency inflows for Mexico with the reduction in exports, tourism and remittances," the Metanalisis research firm said in a report.

The Bank of Mexico said remittances fell 12% in January to $1.57 billion, while Mexico's exports in the first month of the year fell by 31.5% from January 2007.

Finance Minister Agustin Carstens, speaking at an event in Portugal, said Sunday that he sees the peso undervalued as the result of an "excessive market reaction."

Private economists surveyed by the Bank of Mexico last month lowered their average year-end expectation for the exchange rate to MXN14.10 from MXN13.50 in the January survey.

-By Anthony Harrup, Dow Jones Newswires; (5255) 5001 5727; anthony.harrup@dowjones.com

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(END) Dow Jones Newswires

March 02, 2009 15:33 ET (20:33 GMT)


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If I had a business in the United States making food or electronic appliances and it was not producing in Mexico I would feel very nervous right now. I see Mexico's exports are going to be very competitive against the United States and the Chinese.

Let's see: this country is already giving $1.4 billion in aid to fight drug cartels, so they can buy weapons that will eventually end up in the hands of drug cartels through corruption.
Perhaps to save the peso, we have to all be addicted to illegal drugs, eat jalapeno and habanero peppers raised with sewage water, open the borders so remittances can steadily flow at $billions per year.

As I have pointed out before ALIPAC is like holding a conversation on the Boston Red Line T subway car where you might start talking with MIT and Harvard professors with knowledge and insight but wind up talking with tradesmen from Dorchester. The conversation goes from they just discovered the evidence for the Higgs boson and it deteriorates to the Weekly World News says that the President is being advised by extraterrestrials and had a concert with Elvis.