Mexico Cuts Peso 22%; Now 2,200 to $1
The government today sharply devalued the national currency by 22% to 2,200 pesos to the dollar as part of a series of measures designed to shore up the weak economy.
The Bank of Mexico, the nation’s central bank, issued a one-paragraph statement announcing the change in the currency.
“As part of a cooperative program between the government and the workers, campesino and business sectors . . . the controlled exchange rate has been increased today to 2,200 pesos to the dollar,” the statement said.
The central bank said the devaluation represents a 22% weakening of the currency, which on Friday was trading at about 1,800 pesos to the dollar.
The value of the peso in free-market trading plummeted nearly 46% last month after the Bank of Mexico decided to stop providing dollars to support the currency.
The unexpected decline caused widespread uncertainty in the nation’s financial markets and added a fresh kick to the already high inflation rate.
Labor unions recently demanded a 46% increase in the minimum wage to make up for the devaluation of the currency and vowed to stage a nationwide strike on Friday if their demands are not met.
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