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Peso falls to its lowest level in six months due to coronavirus fear

Mexico City, Mexico –The Mexican peso depreciated on Thursday to its lowest level in six months amid a global wave of risk aversion unleashed by persistent fears about the economic impact of the new coronavirus, while the stock market fell more than 2.4 percent.

The national currency traded in mid-February around 18.5 units, its best performance since October 2018, but periods of volatility due to the rapid spread of the virus meant that during the year, it has accumulated a setback.

The peso was trading at 19.85 per dollar at 15:16 local time, with a decline of 1.65 percent compared to 19.52 units of the Reuters reference price on Wednesday. Previously, it fell more than 2.3 percent to 19.98 units, its worst level since the beginning of September.

The death toll due to the outbreak of the virus rose to 11 on Thursday in the United States.

“The risk of a global recession due to the coronavirus has not disappeared and it is evident as the number of confirmed infections outside China continues to grow,” Banco Base said in a report.

Analysts mentioned that they also influenced the behavior of the exchange market betting that central banks in the region could follow in the footsteps of the Fed, which this week cut rates.

The peso has not had an appreciation even when the “spread” of rates has expanded after the Fed cut, the Intercam financial group said in their report. “The market has discounted that Banxico will also do something similar and reduce the rate in the same proportion sooner or later,” they added.

The benchmark S & P / BMV IPC stock index fell 2.44 percent to 42,344.86 points with a volume of 142.96 million traded securities. The stock market advanced in the past three sessions by 5 percent.