© Reuters. New variant of coronavirus pushes the Mexican peso to its worst level of the year
Mexico City, Nov 26 (EFE) .- He closed this Friday with a weekly depreciation of 4.85%, trading at 21.83 pesos per dollar, the worst level since September last year, caused by fear of the new variant of the coronavirus and the change in the nomination for governor of the Bank of Mexico.
The data implies a weekly depreciation of 1.01 pesos compared to the exchange rate of 20.82 units of the previous Friday reported by the Bank of Mexico.
“It is worth mentioning that this is the third consecutive weekly depreciation for the Mexican peso and it is also the highest weekly depreciation since September 25, 2020,” Gabriela Siller, director of economic analysis at Banco Base, told EFE.
The analyst attributed the peso’s depreciation to three major events that occurred during the week.
The first was the nomination of Jerome Powell for a second term at the head of the Federal Reserve, which produced “a strengthening of the US dollar.”
Later there was “an increase in Mexico’s aversion to risk” when President Andrés Manuel López Obrador withdrew the candidacy of former Secretary of the Treasury Arturo Herrara for governor of the Bank of Mexico.
Instead, López Obrador proposed the Undersecretary of Expenditures Victoria Rodríguez Ceja, who if ratified would become the first woman to head the central bank.
“The surprise announcement about the nomination of Victoria Rodríguez Ceja raises doubts about the future of the central bank’s monetary policy, since, among other things, its position on the recent inflationary pressures is unknown,” Siller said.
Finally, the fear of the new variant of the coronavirus detected in South Africa, which has already led to travel restrictions in some countries, “increases the risk that measures similar to those of the second quarter of 2020 will be implemented, with severe negative consequences for the global economic activity “.
The World Health Organization (WHO) declared it this Friday as a “risk variant” and baptized it with the Greek letter omicrón.
WHO experts pointed out that the new variant appears to be more contagious than the previous ones, although there is still no data to determine if it is more or less resistant to covid-19 vaccines.
So far, the omicron variant has been detected in South Africa, Botswana, Hong Kong (China) and Belgium.
This week it was also learned that the general inflation rate in Mexico reached 7.05% in the first half of November, the highest in twenty years.
The Mexican peso, which was around 18.5 units per dollar before the pandemic, suffered its worst moment in March last year when it exceeded 25 units.
The Covid-19 pandemic crisis caused a historic 8.2% contraction of Mexico’s gross domestic product (GDP) in 2020, the worst crash since the Great Depression of 1932.