USD/MXN corrects lower to 23.25, Mexican peso ends turbulent March with a 20% loss

• Mexican peso gains modestly on Tuesday across the board. 
• USD/MXN rebounds during the American session, remains far from Monday’s peak. 

The USD/MXN fell to 23.33 the lowest level since Friday and then rebounded toward 23.70. The pair remains far from the weekly high it reached on Monday when it jumped to 24.56. It corrected lower after the Mexican Exchange Commission announced the first auction of credit in US dollars (from the swap line with the Federal Reserve) up to 5 billion in order to provide liquidity. 

On Tuesday the greenback pulled back against most emerging market currencies, on a relatively quiet (not turbulent) session across financial markets. The economic outlook and the spread of the coronavirus remain the main driver. On Monday, Lopez Obrador’s administration declared a health emergency. The announcement triggered more restrictive measures that will likely affect the economy. The Mexican president has been criticized for prioritizing the economy over health after delaying the introduction of the emergency.  

A terrible month for the Mexican peso 

The USD/MXN is about to end March with a gain of 21%, one of the worst month in history. The Mexican peso was the biggest loser among the most traded currencies across the globe. It is followed by USD/RUB that gained 18% and the USD/COP 17%. 

The dramatic decline in crude oil prices first, global risk aversion and domestic concerns weighed on the Mexican peso. During most of 2019 the Mexican peso outperformed, that situation reversed dramatically over the last weeks.