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The Mexican peso had reached its lowest in a matter if three years against the US dollar. This had led to Mexico's central bank to add more auctions of peso coverage contracts reaching $30 billion, says a recent article.

Also read: Mexico FX Struggles Due to U.S. Election, Coronavirus Outbreak

Effects on the Stock Market Indexes

 Mexico's stock market indexes had also had its worst day with a fall since the economic crisis in 2008. The IPC index closed at a drop of 6.42% on Monday at 38,730.

Decline in World Oil Prices 

On Monday, the Mexican peso closed at an inter-bank rate of 21.18 to $1. This result was the Mexican peso's lowest since January 26, 2017.

The Bank of Mexico and the Treasury Department blames the drop of the Mexican peso to the decline of the global oil prices. Also, it seems the cause of the economic downfall was the worldwide coronavirus outbreak.

Trying to Revive the Decline 

On February 17, the peso had reached a high exchange rate with the US dollar at 18.57.

The central bank of Mexico said it will be increasing the overall amount for the auctions of peso coverage. It aims to change it from $20 billion to $30 billion. This move targets to maintain the normal functioning of exchange markets.

President Andrés Manuel López Obrador's Statement

The Mexican peso's value had appreciated significantly since the start of the leadership of President Andrés Manuel López Obrador. This achievement is one of the accomplishments he always emphasizes and took pride in.

According to López Obrador, he believes the country will recover from the decline of the Mexican peso. He sees the decline in oil prices as a major reason for the event.

The current Mexican president believes the good Mexican currency reserve and its good fiscal balance will help the country overcome this shortcoming. He claims the country is doing well at producing more oil. Also, he exclaims the potential of the nation for greater production.

The Global Coronavirus Epidemic and its Effects to the Mexican Peso 

The coronavirus epidemic is not only affecting Mexico's currency exchange rate to the US dollar but also other countries in the world. This global epidemic had resulted in volatility in the global stock market and foreign exchange rates.

The Positive Side of a Volatile Market for Americans with US Dollars in their Pockets

According to an article, a volatile market shows an opportunity for investors in the stock market to acquire more stocks at lower prices. Those with US dollars can also exchange it for the Mexican peso and get more value for their currency. This is the buying low and selling high strategy.

For US citizens living in the United States, the equivalent value of US dollars with other currencies does not affect prices at stores in the short run. US citizens who live outside the United States of America try to take advantage of the significant shifts in the foreign exchange ratios. These people try to exchange their US dollars with more foreign currencies as prices do not change immediately in the short term, says a recent article.