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Mexican Peso Rebounds Sharply After Slump at Start of 2017

ISSN:1054-8890
LADB Article ID: 80363
Category/Department: Mexico
Date: 2017-08-02
By: Carlos Navarro

The Mexican peso took a beating in the days just before and after US President Donald Trump took office in January. Trump’s statements threatening to impose broad tariffs on imports of Mexican products and to leave the North American Free Trade Agreement (NAFTA) raised strong concerns about the fate of the Mexican economy over the next year. The Mexican currency fell to record lows in January, surpassing 21 pesos per US$1.00. The currency gradually recovered to 19 pesos per US$1.00 by early May and to about 17.90 per US$1.00 by early August. As of the end of July, the peso had increased in value by almost 21% versus the dollar since the start of the year. This was the strongest performance for any currency at the global level, surpassing the positive performances recorded by Poland’s zloty and Sweden’s krona, according to a Bloomberg news service analysis. Another factor that has contributed greatly to the rebound of the Mexican peso is a program that President Enrique Peña Nieto’s administration launched earlier this year to encourage Mexican individuals and businesses to return undeclared capital from overseas locations to Mexico. By all accounts, the program has been widely successful. Between January and July, a total of 102.4 billion pesos (US$5.7 billion) were returned to Mexico by the government-set deadline of July 31.

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