:quality(85)//cloudfront-us-east-1.images.arcpublishing.com/infobae/BS56ONHM7BFPFOWY4WPNCABILU.jpg "Silicon Valley Bank hit superweight; The Mexican currency lost value against the dollar")
He Bank of Mexico (Banxico) reported, at the close of business on Monday, March 13, that the peso was losing ground against the American dollarsince each unit of foreign currency now has a value of 18.97 Mexican pesos57 cents higher from Friday the 10th, marking a slight upward trend that could be attributed to the bankruptcy of Bank of Silicon Valley (SVB).
Remember that Wednesday On March 8, the dollar was worth 17.96 pesos per unit, which was interpreted by many analysts as a sign of investor confidence; However, according to some analysts, the closure of SVB could have had a negative impact on investor sentiment, which would have negative repercussions on international currencies, including the Mexican peso.
In this regard, it should be noted that on Thursday 9 and Friday 10 there was an upward trend, which coincides with the closure of SVB. On the 9th, the value of the dollar closed at 18.05 pesos and on the 10th at 18.40 pesos. Regarding the relationship of these indicators with the closure of SVB, The Economist posted a note supporting this link.
“There is uncertainty about the position the Fed will take on bankruptcies. SVB and Signature Bank. This has been the Fed’s fastest rate of hike and now they face risks,” the national newspaper rescued. Victor GomezProfessor of Economics at the Autonomous Technological Institute of Mexico (ITAM).
Moreover, in a report of Basic bank It has been pointed out that this has nothing to do with any particular performance of the Mexican state, either in its government or in its central bank, since it argued this Monday, March 13 that “the depreciation of the peso is due to greater risk aversion due to the fall in SVB Financial Group in the United Stateswhich generates speculation on a possible crisis of the financial system”.
“It should be recalled that the strength of the peso is partially supported by expectations for growth in exports, investment and remittances, which are affected by scenarios of economic contraction and high uncertainty”
As this problem came from abroad, Basic bank He also observed the measures taken in the United States (UNITED STATES), which were not long in coming and, since Sunday 12, in a joint statement, it has been made public that the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) “took decisive steps to bolster public confidence in the U.S. banking system.”
They also approved measures guaranteeing the resources of SVB customers, where they assured that they will have access to their money from Monday 13, while waiting for new certainty to be generated in the sector. “The Federal Reserve announced the availability of additional funds so that depository institutions have the capacity to manage their customers’ withdrawals,” Banco Base said.
Finally, it is pointed out that the general behavior of the peso, since the beginning of the federal administration headed by President Andres Manuel Lopez Obrador (AMLO), was favorable. In this sense, it should be remembered that the behavior of currencies in the region (Latin America) increased slightly; however, the Mexican peso has been exceptional compared to other emerging nations.
This is not entirely due to the government of Mexico, since Banxico, its management and respect for its autonomy is a decisive factor, in addition to the fact that the free market is the one that raises the value of a currency, since more it is used, the greater the certainty. “Foreign exchange policy is the responsibility of the Foreign Exchange Commission, which is made up of civil servants from the Ministry of Finance and Public Credit and Bank of Mexico», Underlines Banxico on its official website.