### Mexican Peso Dips Below Key Mark, Hits 20 Pesos Per Dollar
On Thursday, September 5, 2024, the exchange rate of the US dollar soared past the significant 20 pesos mark, reflecting growing economic concerns. Notably, the depreciation of the Mexican peso is attributed to ongoing worries about the advancement of a controversial judicial reform bill in Congress and investor reactions to recent US labor market data.
According to British news agency Reuters, the Mexican peso traded at 20.1090 per dollar, marking a 0.92% decline from the previous day’s reference price. Earlier in the day, it had weakened further to 20.1520 units, a level last seen in October 2022. This development made the peso the most devalued currency against the US dollar among the 16 tracked by Bloomberg, a specialized US digital media outlet.
Financial institutions reflected the peso’s slide; Citibanamex quoted the dollar at 20.50 for sale and 19.37 for purchase. Scotiabank’s rates were even more severe, with 20.80 pesos for sale and 17.00 for purchase.
In their opening analysis, Grupo Financiero Monex highlighted negative, mixed movements in global stock markets following a cooling US labor market, which added the smallest number of jobs since 2021.
Locally, the judicial reform bill has moved on to the Senate for approval. Unlike the House of Representatives, the Morena coalition in the Senate needs one more vote to achieve a supermajority. The vote is expected next Wednesday.
Gabriela Siller Pagaza, an analyst at Banco Base, warned of a potential upward trend in the exchange rate now that it had breached the psychological 20 pesos per dollar mark, increasing the likelihood of hitting an annual peak of 20.2181 pesos. Siller Pagaza also pointed out that the peso’s depreciation is compounded by the strengthening of the Japanese yen, which reduced the attractiveness of the carry trade. This appreciation of the yen is driven by comments from Bank of Japan officials about continuing to raise interest rates.
### Secondary Article: Market Analysts Predict Continued Volatility
In light of the recent depreciation, market analysts are forecasting continued volatility for the Mexican peso as investors remain wary of both domestic and international economic factors. According to financial experts, the fate of the controversial judicial reform bill will remain a key focus for investors, potentially influencing currency valuation in the coming weeks.
Tommy Brown, a senior economist at Global Financial Insights, stated, “The judicial reform’s passage will impact legislative dynamics and economic stability, making it a significant factor for currency traders. Meanwhile, ongoing assessments of the US labor market will also play a critical role in determining the peso’s performance against the dollar.”
In a parallel development, the Bank of Japan’s anticipated interest rate hikes are likely to affect global currency markets, including the peso. “A stronger yen can shift investor preferences, further pressuring emerging market currencies,” Brown noted.
As the global economic landscape evolves, stakeholders must stay informed about legislative decisions and international market trends that could shape the future trajectory of the Mexican peso.