The peso plunged into 14-to-the-dollar territory Thursday, capping off a tumultuous week for currencies in emerging market economies.
Thursday was the worst day of the year for the peso, with the currency loosing 2.58 percent of its value against the dollar.
The 13-percent loss in September – mostly in this week alone – makes the peso the worst performing Latin American currently at this time, although some of the others, including the Chilean peso, have scarcely fared much better.
The peso closed Wednesday (Banamex quote) at 13.22 buy and 13.72 sell, its poorest level since October 5, 2009.
By the end of Thursday, Banamex showed closing prices of 13.60 buy and 14.10 sell, numbers not seen since April 27, 2009.
Exchange houses at the usually competitive Mexico City Airport were reportedly trading at 12.92 buy and 13.95 sell.The negative forecasts for the U.S. economy released by the U.S. Federal Reserve, coupled with gloomy growth indictors from Europe and China have severely affected the peso, analysts say.
Fears that the slowdown in growth could be even worse than three years ago, and the strong possibility of a Greek debt default, led International Monetary Fund (IMF) chief Christine Lagarde this week to call the situation “dangerous” for the global economy.
The director of the Banco de Mexico has yet to announce whether the bank will dip into its considerable dollar reserves to bolster the peso, a measure it took in 2009 in similar circumstances.
Some economists are saying the fall in the peso is probably an overreaction, and suggest that the currency will stabilize, or return to near its previous level, in the days to come.
International markets also suffered this week amid the economic uncertainly, with the Dow Jones Industrial Average falling 3.5 percent Thursday, and the leading European indexes down around 5 percent.
The Bolsa Mexicana (Mexican Stock Exchange) fell by 4.82 percent Thursday – its second biggest drop of the year.
In other disturbing news, benchmark (Brent) crude oil fell over 5 percent, while the 10-year U.S. Treasury yield dropped to 1.71 percent, its lowest level in 60 years.