New variant of coronavirus pushes the peso to its worst level of the year

The Mexican peso closed this Friday with a weekly depreciation of 4.85 percent when trading at 21.83 pesos per dollar, the worst level since September of last year, caused by fears 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 weekly depreciation consecutive for the Mexican peso and it is also the highest weekly depreciation since September 25, 2020 ″, explained Gabriela Siller, director of economic analysis at Banco Base.

The analyst attributed the depreciation of the peso to three important 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 the Mexico’s risk aversion”When President Andrés Manuel López Obrador withdrew the candidacy of the former Secretary of the Treasury Arturo Herrara to governor of Bank of Mexico.

Instead, López Obrador proposed to the Undersecretary of Expenditures Victoria Rodriguez Ceja, who if ratified would become the first woman to head the central bank.

“The surprise announcement about the nomination of Victoria Rodriguez 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, “said Siller.

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 global economic activity.”

The World Health Organization (WHO) declared it this Friday as a “risk variant” and baptized it with the Greek letter omicrón.

The experts of the who They 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 omicrón 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 it reached 7.05 percent 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 of last year when it exceeded 25 units.

The COVID-19 pandemic crisis caused a historic contraction of 8.2 percent of Mexico’s gross domestic product (GDP) in 2020, the worst collapse since the Great Depression of 1932.

With information from EFE

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