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Exchange rate on the peso hovers near $20 again

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Worries over the U.S. corporate tax cut have dealt the latest blow to the peso.

The central bank tried to shore up the currency this week, but the peso failed to rally. One dollar buys 19.67 pesos as of Saturday morning, the peso’s lowest level in nearly 10 months.

Worries over inflation and stalled NAFTA renegotiations have dogged Mexico’s economy all year — and then came the passage of the new U.S. tax bill.

With corporate taxes lower in the U.S., Mexico possibly won’t look as attractive to businesses, bringing concern of a possible drop in foreign investment.

It’s not a pure win for people who earn their pay, or collect pensions, on the dollar. Inflation has hit groceries, gasoline and building supplies.

But a stronger dollar tends to attract tourists, buoying that sector of the economy.

Gabriela Siller, chief economic analyst at Banco Base, said the exchange rate would remain vulnerable in 2018 due to speculation related to the July 1 presidential election in Mexico.

Source: National Public Radio, Reuters

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