Mexican Peso Takes the Sharpest Downturn in Years

It appears as if all of Latin America is being sucked into the economic vaccuum created by the United States' economic decline, and Mexico is no exception. A previous competitor to the US Dollar, the Peso shows little chance of catching up now, with a gross contraction of 1.8%, and that number is expected to rise as 2009 continues.


"The steepest decline in Mexico’s peso in 13 years blindsided everyone from UBS AG economists to Gustavo Huitron, the local marketing manager for Mercedes-Benz.

After weakening 20 percent last year, the currency fell to a record low of 14.4484 per dollar today. RBS Greenwich Capital Markets in Greenwich, Connecticut, now predicts another 4.5 percent drop by June 30. The peso’s worst performance since 1995’s so-called Tequila Crisis is being driven by the U.S. recession and falling oil prices, which are cutting Mexican exports and government revenues."

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President Calderon Defends his Nation Against Dire Predictions

"Stark assessments of the threat that drug crime poses to Mexico's stability have put the government of President Felipe Calderon on the defensive as he tries to forge a relationship with a new U.S. president.Rising violence, spurred in part by Calderon's 2-year-old offensive against drug traffickers, has prompted some officials and analysts in the United States to warn that Mexico faces a risk of collapse within several years."

With the recent inauguration of President Obama, he sought to quickly reconcile his neighbours with tough talk of civil reform and a new face for the internecine "War on Drugs" that is spreading police brutality, gang uprisings, and local-level corruption. With the recent prediction of Mexico collapsing within the few years by the US Government, Mexico's President Calderon has promised a new method of management and offers proof of success for his new anti-drug policies. Calderon continues to propose that while drug trafficking is a problem that is in the process of being handled, the core governmental system of Mexico has been able to side-skirt these damming issues, staying largely free of corruption and general incompetence.

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