After Some Long-Lasting ‘Ups’, The Mexican Peso Hits Some ‘Downs’
MEXICO CITY — The last few weeks were great for some U.S. exporters selling south of the border: the Mexican Peso had some of its strongest days in years, partially benefited by the U.S. government’s shutdown.
But the trend is changing, affected by the Mexican government’s oil strategy.
Like other currencies, the Mexican peso became stronger against the dollar as a result of the untouched rates from the Federal Reserve system and the stable oil prices worldwide.
The Central Bank of Mexico’s rates also helped, independent analyst Macario Schettino explained. However, Schettino said that none of this had to do with Mexico’s newly elected president, Andrés Manuel López Obrador.
“The Mexican Peso has moved a little bit stronger, but I don’t see any reason to believe that investors are really attracted by López Obrador,” Schettino said.
On Wednesday, Fitch ratings agency downgraded Pemex, Mexico’s state oil company, to just above its “junk” status.
But López Obrador said Pemex is the best it's been in 30 years thanks to his government’s strategy, while disdaining Fitch’s rating.
“It is very hypocritical what these organizations (like Fitch) do, since they allowed looting in the past, endorsed the so-called energy reform and knew that foreign investment did not arrive,” López Obrador stated.
But right after the downgrade, the Mexican Peso started to lose strength. And many analysts fear that more downgrades by rating agencies will come in the future to Mexico and its state companies.
The overall disapproval from markets and investors to López Obrador’s policies and strategies could eventually bring a negative impact to the country’s economy and exchange rates.