Spotlight: Mexican currency to continue to fall: analysts

Mexico's currency will face a difficult scenario during the next two months, financial analysts told Xinhua recently.

It is possible that Mexico's currency will depreciate to above 21 Mexican pesos per U.S. dollar, largely due to financial and political changes in the United States, the analysts said.

From Sept. 6 to Sept. 19, the peso registered a huge fall in nine days, depreciating in the interbank market by 7.78 percent, with 19.68 pesos per U.S. dollar, one of its lowest levels in history, according to data released by Mexico's Central Bank (Banxico).

The analysts are nervously looking at the markets for three factors, with two of them being generated by Mexico's northern neighbor -- the United States.

Firstly, the analysts were worried about the possibility that the U.S. Federal Reserve could increase its interest rates. Secondly, another cause for concern is the U.S. presidential campaign for the upcoming election.

James Salazar, a financial economic analyst from CI Banco, a leading foreign currency exchange bank, told Xinhua on Tuesday that investors are worried that an increase in the interest rate, which sat at a range of 0.25 percent to 0.50 percent until Sept. 21, will unleash moving capital to U.S. dollar bonds, putting pressures on the majority of currencies.

The Fed announced on Wednesday that there will be no change to the interest rate at the moment, but hinting a possible raise before the end of this year.

Also, the possibility of U.S. republican candidate Donald Trump winning in November is keeping the financial markets on tenterhooks as they look on with reservations regarding his protectionist speech on trade, said Salazar.

"In the specific case of the Mexican peso, they (financial markets) feel that the proposals would affect Mexico much more than any other country in terms of the implications that Trump is looking for," said the CI Banco analyst.

The recent fall in the Mexican currency was registered after it was revealed that U.S. presidential candidate Hillary Clinton hid her health problem and Trump reduced the gap in the pre-election polls.

Salazar predicted that the peso will be subject to volatility until the end of the presidential election in the United States.

The third factor that has caused the Mexican currency to fall in recent days is the fall of oil price, which decreased last week to 43 dollars per barrel from the 47.620 dollars that was set on Sept. 8.

"This punishes the currencies from emerging economies that are considered more dependent on oil, such as Mexico," said the analyst.

The Mexican currency has been gradually losing ground against the U.S. dollar since Jan. 2015, after maintaining a rate of below 14 pesos per U.S. dollar between 2009 and 2014, according to data released by Banxico.

The Mexican peso reached a historic low against the U.S. dollar on June 24, 2016, when it reached 19.52 Mexican pesos per U.S. dollar after the United Kingdom, through a referendum, voted to leave the European Union.

A senior technical analyst at the brokerage house Monex, Francisco Caudillo, warned that his predictions point towards the Mexican currency depreciating to above 20 Mexican pesos per U.S. dollar during the final days of September. He added that it will reach 21 pesos per U.S. dollar between October and November.

"We have seen a very clear upward trend in the exchange rate and this favors the possibility that the U.S. dollar will continue to appreciate," said Caudillo. Endi