'Down goes the peso, down goes the peso'
Down Mexico way, the peso is dropping and dropping fast. It is not a devaluation, such as in 1976 or the one that I lived through in 1982. It is more like 1994, when the peso floated and crashed over a week.
Nevertheless, it is a problem.
This is from Mexico News Daily:
The bad news continues for the Mexican peso, which fell to a record low of more than 24 to the United States dollar early Wednesday morning before recovering slightly.
According to financial data and media company Bloomberg, a single greenback was trading at 24.11 pesos at about 3:30 a.m. Wednesday. Just after 9:00 a.m. CT, the peso had recovered to 23.75 to the U.S. dollar.
In banks, the U.S. dollar was selling for 24.12 pesos on Wednesday morning, the newspaper El Financiero reported.
The peso problems are not really related to the coronavirus. As we have reported, there is a business slowdown south of the border. My friends tell me that the slowdown is a lack of confidence on President Andres Lopez-Obrador.
What does this mean for us, especially in this crisis?
The virus will stop Americans from traveling to the resorts and that will cripple the peso even further.
The weak peso will create more capital flight -- at least I saw that in the past.
The current economic problems, plus the weak peso, will probably drive people north. Sadly, the biggest beneficiaries will be the cartels who have dollars in their pockets and will likely use them to recruit people.
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