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The cut to the credit rating of the United States by the Fitch Ratings agency has already left its first consequences on the national economy. Yesterday, the peso and the Mexican Stock Exchange (BMV) fell for the third consecutive day, while financial analysts do not rule out greater long-term impacts.
At the close of the day on Wednesday, the exchange rate was quoted at 17.0291 pesos per dollar, a depreciation of one percent compared to the previous session, according to Banco de México (Banxico).
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During the day, the exchange rate registered a maximum of 17.0820 pesos per dollar, as well as a minimum of 16.9670 pesos per unit. With the above, the peso accumulated a streak of three consecutive sessions in decline. Days prior to the Fitch Ratings decision, the local currency was pressured by the second quarter growth data in Mexico and the conclusion of quarterly corporate reports.
For its part, the BMV’s Price and Quotation Index (IPC) concluded at 53,283.56 units, a drop of 1.71 percent compared to the previous day, with which it also accumulated three straight days of setbacks.
“The indicators show that the door could be opening for a change in trend in the exchange rate, something similar to what happened in March with the banking disorder in the United States,” warned Gabriela Siller, director of economic and financial analysis at Base Financial Group.
According to the specialist, this implies that the peso could depreciate to the level of 17.80 pesos per dollar, only to appreciate again when the nervousness passes.
In a report released Monday afternoon, Fitch Ratings argued that the downgrade of the US rating from ‘AAA’ to ‘AA+’ reflects expected fiscal deterioration over the next three years, as well as a burden of government debt. generally high and growing.
In the same way, he explained that it was a consequence of the erosion of governability in relation to other countries that have the same sovereign note, due to a series of political tensions unleashed in recent years.
For the Secretary of the Treasury of the United States, Janet Yellen, it was an unjustified decision, since the credit risk agency did not consider the current vigor of the economy of that country.
EU GENERATED DISTRUST
In an interview with Reuters, Richard Francis, a senior director at Fitch Ratings, added that the credit agency based its decision in part on a perceived deterioration in the US government, as this leads to less confidence in the government’s ability to address problems. tax and debt.
“Obviously, the debt ceiling debate itself highlights that risky policy and polarization that we have seen, and it has been happening every two years since 2011, more or less,” said the director of the rating agency.
The latest suspension of the debt ceiling in the United States, agreed in June, will last until early 2025, when another political debate over the debt limit is likely to take place, the executive added.
For the United States to improve its rating, there would have to be a combination of factors, such as a stabilization of debt relative to GDP, and possibly a permanent suspension of the debt ceiling, according to the Fitch Ratings official.
With the change in the rating, there are now two credit agencies that have withdrawn the maximum degree of confidence from the US economy, after Standard & Poor’s did the same in 2011.
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“It is likely that this will trigger some changes in the operation of the markets, because the investment policies of financial institutions would force them to reposition themselves,” Marcos Arias, an economic analyst at Grupo Financiero Monex, stated in a report.
According to the specialist, the Fitch Ratings movement unleashed a great deal of controversy given the context of resilience that the US economy has shown, and that has led institutions such as the Federal Reserve (Fed) or the International Monetary Fund (IMF) to rule out scenarios of recession in the short term.
2023-08-03 11:00:00
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