A recipe for a debt crisis.
On Monday morning the world’s tenth most traded currency, the Mexican peso, set a historic precedent that few Mexicans will welcome. For the first time ever, one US dollar fetched as many as 20 Mexican pesos in some of the nation’s banks, including its biggest, Bancomer, following eight consecutive days of losses.
There are plenty of reasons for Mexico’s peso woes, including the nation’s slowing economy, the government’s tightening fiscal strains, and the recent resignation of the Minister of Finance and Public Credit, Luis Videgary Caso, after being blamed for arranging an impromptu meeting between Mexico’s Premier Enrique Peña Nieto and the Donald Trump.
The pains of much-shrunken, desperately debt-challenged, state-owned oil giant, Pemex, have also taken their toll. All these factors have contributed to the peso’s spectacular fall from grace – it now takes 60% more pesos to buy $1 than it did in January 2014. But there are two other, even more important reasons for the currency’s spectacular fall from grace…
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