Mexico City, Mexico — President Andrés Manuel López Obrador estimated that his administration will end without devaluation of the Mexican peso. López Obrador says for nearly six years, his government has maintained strength, especially in the recent nervousness among international financial markets.
“It is very likely that we will reach the last day of government without a devaluation and this has not been seen since 1970, for more than 50 years. (…) If we reach the end of September without falling, it will be historic like many other things that are historic: foreign investment, reserves of the Bank of Mexico, salary increases,” he said at the Tuesday morning press conference.
As of Monday, the local currency appreciated by five percent against the US dollar, a figure that places the country in second place worldwide only below the Swiss franc, which has appreciated by 14.6 percent. This, he said, does not mean a devaluation, as occurred in previous administrations.
The Mexican peso is currently in better shape than currencies such as the euro, which is down 3.4 percent, the Canadian dollar down 4 percent, the Japanese yen down 27 percent, the Brazilian real down 48 percent and the Russian ruble, which is down 77.2 percent.
On Tuesday morning, the Mexican peso was trading at 19.32 per USD after a series of falls in markets and stock exchanges around the world following the publication of unemployment data in the United States, which has caused uncertainty since August 2.
The President recalled that in previous six-year terms the national currency faced constant devaluations.
“During the administration of Miguel de la Madrid (1982-1988) it registered an appreciation of minus 4,462 percent. During that of Carlos Salinas de Gortari (1988-1994), minus 49.1 percent, with Ernesto Zedillo (1994-2000) minus 172.6 percent, during that of Vicente Fox (2000-2006) minus 15.3 percent, during the period of Felipe Calderón (2006-2012) minus 20.8 percent and during that of Enrique Peña Nieto (2012-2018) minus 43 percent,” he detailed.
“The peso was devalued during all of those governments, but it has not been devalued during our administration, during this six-year term. It is the first time in 50 years that our peso has not been devalued,” he added.
President López Obrador reiterated that Mexico can withstand the contingencies of the international order by having a strong and stable economy.
“We are able to bear it. We are holding on because we do not have an unmanageable debt, that is, we are careful not to get into debt. The collection is very good. We have a strong economy, but it is an interconnected world.
“We are already very integrated into the United States economy so it is not that this crisis arose there because of the announcement of the increase in unemployment, but it is spreading, of course, it affects us and everyone.
“Hopefully this will not happen again, that there will be no more crises in the United States or anywhere else,” he said.
In recent days, he said, the country passed the test “because it was a global financial crisis. Currencies fell everywhere, stock markets everywhere.”
President López Obrador indicated that the Government of Mexico will be aware of what happens in this context.
“This crisis occurred in the United States and then in Japan and we have to be careful because they are already warnings that the world economy is not doing well and we have to be very alert,” he said.
López Obrador said that thanks to the record international reserves of the Bank of Mexico and the constant appreciation of the Mexican peso during his government, the national economy will withstand the recent instability in international financial markets.
In addition, he said, the country maintains strong finances which allows it to face adversities that cause instability worldwide such as the unemployment data in the United States.
“We have a buffer zone. It doesn’t affect us that much because our finances are very strong. Of course, we are neighbors of the United States, there is economic integration and it affects the whole world, it affects Japan, it affects everywhere, but we can resist a little more,” he said.
López Obrador will finish his term as the President of Mexico on September 30 when President-elect Claudia Sheinbaum will become the country’s first female president.
