US dollar back to 18 pesos, which are the reasons?
US dollar Exchange rate jumped 30 cents today, which is over 18 pesos per dollar for the first time since March 23rd. These are the factors why the Mexican peso has been lately under pressure.
The oil producers are having a meeting this month in order to have an agreement to output freeze the crude oil. This would help the price; however, the markets doubt on the will to reach an agreement. Mexico, as an oil producer is getting affected by the expectations.
The most recent information is that the Fed will adjust its way on raising the interest rate according to the performance of the US economy, but taking into account the defects that the global weakness might have over the US economy.
As per as the members of the monetary policy committee, there has only been two increases vs. the four that were expected at the end of 2015. This perspective change helped to slow down the US dollar.
Markets are nervous because some of the Fed members are making comments about the possibility on increasing the interest rates before it was expected. The effect is a dollar recovering.
The last economy data from China has given back a smile to the market as it looks that the manufacturing industry fall has stopped. Also, the government has announced stimulus measure.
SAT has announced to the Congress the perspective for next year, and they anticipated that the situation is not getting better. A growth of 2.6 & 3.6% is expected, a lower oil price and less production in 36 years. Some analysts are saying that maybe the expectations are even too high.
Salomon Juan Marcos Villarreal, as a president of Grupo Denim, a manufacturing company that exports denim jeans to US customers, explained how the US dollar is affecting his company. “We are an export company, and we do get pay in US dollars, but, we are in Mexico and all labor and administrative costs are in pesos; therefore, we do get affected” , said Salomon Juan Marcos Villarreal.