Peso Pounded Most Since Election As Corruption Probe Deepens

The Mexican peso has tumbled over 3% in the last 4 days, plunging to its weakest against the USDollar since March as the ongoing corruption investigation soured market sentiment.
As we detailed yesterday, a deepening graft investigation involving Alejandro Gutierrez, a former deputy of sitting President Enrique Pena Nieto could imperil his party’s chances in the coming July elections. An ongoing scandal could also bolster the prospects of leftist rival Andres Manuel Lopez Obrador.
“The news of this arrest scares investors,” said Jesus Lopez, a strategist at Banco Base in Monterrey, Mexico. “These days, the exchange rate is more sensitive because of low liquidity, and we already know that the peso is more vulnerable from the political side.”
And the pso is extending losses…

This post was published at Zero Hedge on Dec 22, 2017.

Trump Tweets – Peso Plunges

Trump tweets of taxes at the southern border and the Peso plunges. Mexico has abundant petroleum, cheap labor and a preeminent location for global companies to reach the largest consumption market in the world. Yet they struggle with slow growth and massive corruption. To add insult to their injurious system, Mexico’s worst nightmare has now been elected next door with a vow to tax Mexico, penalize potentially any factory that locates there and to reverse the tide of illegal immigration. Not surprisingly, the Bearish sentiment is rising over the plight of the Peso as Trump tweets promise to indirectly punish their currency further in 2017. Look for depreciation of the Mexican currency (MXN) down to 23 to 24.4 per dollar (.0435 – .041 dollar/peso) with resistance near 20.
Mexico is clearly one of the most affected followers of Trump Tweets as illustrated in the chart below.

This post was published at FinancialSense on 01/09/2017.

Mexican Peso Crashes To Record Lows As Trump Odds Surge

While correlation is not causation, it is certainly a wink and a nudge in this case. As Donald Trump’s poll numbers soar so the Mexican Peso has been collapsing against the US dollar, and just broke to fresh record lows…
After last year’s annus horribilis that saw the currency shed more than 14 per cent of its value against the dollar, the peso is down an additional 10.5 per cent so far this year – making it the world’s second worst performing major emerging market currency after the Argentine peso, report The FT’s Pan Kwan Yuk and Jude Webber.
Low oil prices have hobbled Mexican president Enrique Pea Nieto’s efforts to open up the country’s energy sector to private investments and forced the government to cut spending and growth forecasts. In addition Mr Pea Nieto has seen his approval ratings sunk to record lows amid anger over his handling of corruption scandals and perceived inability to maintain law and order in Latin America’s second most important economy.

This post was published at Zero Hedge on Sep 16, 2016.

Big-Oil Bailout Begins as Debt Spirals Down

Mexico’s proud sugar daddy becomes giant financial sinkhole.
Pemex, Mexico’s state-owned oil giant, cannot seem to get a break these days. It notched up 13 straight quarters of rising losses. It now owes over $80 billion to international investors and banks. It needs to raise $23 billion this year to stay afloat. The cost of servicing that gargantuan debt mountain continues to rise. So it tries desperately to rein in its spending, without tackling – or even discussing – its endemic culture of corruption.
In recent days, Pemex received a 15 billion peso ($840 million) lifeline from three of Mexico’s homegrown development banks, Banobras, Bancomext and Nafinsa, to help the firm pay back some of its smallest providers, consisting mainly of domestic SMEs.
The loan was part of an arrangement cobbled together between the banks and the Mexican government. By today’s standards the amount involved is pretty meager, but the operation was about more than just raising funds: it was meant to restore confidence among both investors and suppliers in the firm’s ability to repay its debts.
‘This sends a sign of stability and confidence to the sector, which has been very nervous’ payments would not be made, explained Erik Legorreta, President of the Mexican Oil Industry Association, which represents around 3,000 service providers. ‘Members of the industry now have the confidence and certainty that the payments will be honored.’

This post was published at Wolf Street on March 16, 2016.

Seeking a Saviour

It’s an unfortunate truth that, when people are worried about the future, they often put their faith in politicians to somehow make everything better.
Politicians, of course, are famous for promising panaceas for whatever troubles voters and inventing new troubles for voters to worry about, presenting themselves as the only ones who can solve these woes.
It’s not surprising then, that over time, any nation may slowly deteriorate into a population of nebbishes who not only let their government do all the thinking but also hand over all responsibility for the future.
In the last year, the world has seen many elections in which the top spot (president, prime minister, premier, etc.) was contested. In Brazil, Socialist President Dilma Rousseff was returned but almost immediately ran into trouble over a failing economy, scandals and corruption charges. In less than a year, her popularity sank to the lowest level for any Brazilian president on record.
In the UK, Conservative Prime Minister David Cameron was returned, which immediately triggered riots in London by the anti-austerity crowd. He will soon be facing increasingly angry voters of all stripes who are boiling over from the dramatically worsening immigration question. In addition, he’ll soon be facing a referendum on the UK’s membership in the EU – an event he’s been postponing for quite some time.
In Canada, voters have chosen to oust the Conservatives and return to the golden promises of the Trudeaus. With that, the Canadian dollar dropped immediately. Mr. Trudeau is planning a vast programme of public spending in the face of a declining economy, but he hasn’t offered any explanation as to how this can be paid for.
Argentina has just had its election. The departing Peronist, Cristina Kirchner Fernndez, has passed the baton (and a failing economy, rapidly declining peso and civil unrest) to the more conservative Mauricio Macri.

This post was published at GoldSeek on 10 December 2015.

Global Deflation Watch – – -Latin Currencies Tumble On China Growth Fears

Latin American currencies led by the Brazilian real fell to their lowest on record, posting the steepest two-day decline in two years, after Chinese economic data showed the world’s second-biggest economy is slowing.
The Brazilian central bank’s offer of $4 billion in foreign-exchange credit lines wasn’t enough to keep the real from tumbling 2.9 percent to a fresh record low as of 4:40 p.m. in New York. TheChilean peso breached 700 per dollar for the second time in a decade, falling 0.9 percent to 703.88 per dollar. Mexico’s peso slide 1.4 percent to 17.1227 per dollar even after the central bank sold dollars for a third straight day. The Colombian peso has weakened 4.8 percent in the past week, its steepest decline since 2009.
Emerging-market currencies worldwide sold off on the Chinese data, and declines were the biggest in Latin America, where the largest economies are dependent on the Asian nation’s demand for their commodity exports.

This post was published at David Stockmans Contra Corner on September 24, 2015.

Emerging Market Currencies Tumble to Record Low in ‘Violent’ Selloff

Emerging-market currencies are in free fall.
An index of the major developing-nation currencies fell to an all-time low this week, extending its drop over the past year to 19 percent, according to data compiled by Bloomberg going back to 1999. The Russian ruble, Colombia’s peso and the Brazilian real have fallen more than 30 percent over the past year for some of the worst global selloffs.
China’s economic slowdown is pushing downCOMMODITY PRICES, weighing on raw-material exporters from Brazil to Mexico and South Africa. Adding to the pain is the expectation that the Federal Reserve will soon embark on the first interest rate increase since 2006, threatening to lure capital away from developing nations.

This post was published at David Stockmans Contra Corner on July 26, 2015.