Mexican Peso Falls To Its Lowest Level Since March
DAVID GREENE, HOST:
In Mexico, consumers are feeling the pinch as the national currency continues to struggle against the dollar. The central bank tried to shore up the peso this week, but the currency failed to rally. Worries over inflation at home and stalled renegotiation of the North American Free Trade Agreement have been dogging Mexico's economy all year. But as NPR's Carrie Kahn reports, the latest blow to the peso came with the passage of President Trump's tax bill.
CARRIE KAHN, BYLINE: The fear south of the border is that with corporate taxes lower in the U.S., Mexico won't look as attractive to businesses. A possible drop in foreign investment here sent the peso tumbling this week to its lowest level in nearly 10 months. Mexico's central bank tried to perk up the peso by selling off an additional $500 million in a foreign currency auction. The tactic usually gives the peso a boost, but there was no such rally this time.
Rosa Maria Rivella stands outside an ATM near downtown Mexico City, where the exchange rate on the door has the peso hovering close to 20 to the dollar. She says everything has gone up.
ROSA MARIA REVILLA: (Speaking Spanish).
KAHN: "Basic foodstuffs like rice and beans," she says, not to mention natural gas, which she says has skyrocketed in the last two months. Mexico imports natural gas from the U.S. to the tune of nearly $4 billion a year.
REVILLA: (Speaking Spanish).
KAHN: "Who knows what we're going to do?" she chuckles, trying to stay upbeat. Down the street, 27-year-old educator Ricardo Lozano doesn't try and hide his pessimism. He says he thinks 2018 won't be that happy of a new year.
RICARDO LOZANO: (Speaking Spanish).
KAHN: "I try and have hope. But the way things are going, it doesn't look good," he says.
Economists here tend to agree. They say a whole host of factors will fall hard on Mexico next year. Inflation is expected to continue rising. And uncertainty next year over negotiations of the North American Free Trade Agreement and Mexico's own presidential elections will increase pressure on the peso.
Carrie Kahn, NPR News, Mexico City.
(SOUNDBITE OF RODRIGO Y GABRIELA'S "TORITO") Transcript provided by NPR, Copyright NPR.