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USD/MXN Rises Amid Discovery of New Coronavirus Variant in Mexico

The Mexican peso weakened against its US counterpart to start the trading week, joining the decline in most other Latin American currencies. Foreign exchange markets sold the peso after it was reported that the new COVID-19 variant that was first…

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The Mexican peso weakened against its US counterpart to start the trading week, joining the decline in most other Latin American currencies. Foreign exchange markets sold the peso after it was reported that the new COVID-19 variant that was first seen in the UK had been discovered in Mexico. In addition to disappointing economic data, the peso could be in for a rough first quarter.

Health officials announced that they had confirmed the new mutation of COVID-19 in the northern Tamaulipas state. According to Tamaulipas Health Minister Gloria Molina, a 56-year-old man flew on a December 29 flight from Mexico City to the city of Matamoros and tested positive for the new variant.

The new strain has the globe worried since it is considered to be 70% more infectious. Early studies have found that the coronavirus vaccines are effective in preventing the new strains. But for how long?

The United Kingdom has already expanded its lockdown measures in response to the latest developments. So far, few-dozen nations have confirmed several cases, including the US, Canada, South Africa, Australia, and several European nations.

After making some progress in the final two months of 2020, Mexico has reported another uptick in cases, with the latest single-day infections topping 10,000. In total, Mexico has reported more than 1.5 million cases, with a death toll of about 134,000.

Industrial output disappointed investors as industrial production contracted at an annualized rate of 3.7% in November. This is worse than the 3.4% drop in October, and it is lower than the median estimate of -2.9%.

Last week, it was reported that automobile production climbed 18.4% year-over-year in December, while vehicle exports advanced 16.1% year-over-year last month.

Latin American currencies have tumbled at the expense of a rallying US dollar. MSCI’s index for LatAm currencies slumped 1.4% on Monday. Despite the greenback facing a tremendous level of shorts heading into 2021, the US Dollar Index (DXY) has staged a mini rebound, advancing 0.5% in the first trading week of the year. The buck has benefited from rising Treasurys, with the benchmark 10-year bond nearing 1.2%.

The USD/MXN currency pair rose 0.14% to 20.0366, from an opening of 20.0048, at 17:27 GMT on Monday. The EUR/MXN fell 0.27% to 24.3837, from an opening of 24.4449.


© AndrewMoran for Forex News, 2021. |
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