Mexican Peso Continues to Decline Amid Wall Street Meltdown

Local Currency Plummets on Friday Morning Following U.S. Employment Report, Heightening Concerns About Mexico’s Largest Trading Partner.

The Mexican peso fell sharply on Friday morning after a U.S. employment report heightened concerns about the economy of Mexico’s largest trading partner. The local currency depreciated, briefly surpassing the 19 per dollar mark.

The spot exchange rate is currently at 18.9917 pesos per dollar. Compared to yesterday’s closing rate of 18.7721, according to the official data from Banco de México (Banxico), this represents a loss for the peso of 21.96 centavos, or 1.17 percent.

The dollar’s price is fluctuating within a wide range, with a high of 19.2221 and a low of 18.8508 pesos. The U.S. Dollar Index (DXY) from the Intercontinental Exchange, which measures the greenback against a basket of six major currencies, is down 1.16% at 103.21.

Investors are increasingly worried that the U.S. economy might be entering a recession. Recent economic indicators, especially those related to employment, have shown signs of slowing down.

This morning, the Bureau of Labor Statistics reported that non-farm payrolls increased by only 114,000 last month, well below the economists’ expectation of 175,000. The unemployment rate also rose to 4.3% from June’s 4.1%.

The Sahm Rule, which detects the onset of a recession in the U.S., would confirm this if the three-month moving average of the unemployment rate rises by 0.50% above its lowest level in the previous 12 months. This rule plays a significant role in shaping economic policy.

Essentially, traders are beginning to believe that the Federal Reserve’s high-interest-rate policy might have slowed the economy more than intended in its fight against inflation, and that a potential rate cut in September could come too late.

ABOUT THE AUTHOR See More

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

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