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The Dollar Exceeds 20 Pesos after the Cancellation of the New Airport

By: Dr. Alejandro Díaz-Bautista, Economist (PhD)

The dollar closes above 20 pesos; and the Mexican Stock Exchange falls 4.2%, its biggest drop since November 2016.

The rating agency Moody’s downgraded the bonds of the New Mexico International Airport to Baa3 and placed them in a negative perspective after the president-elect López Obrador announced the cancellation of the new airport project.

The peso is shaping and records its worst day since the election victory of Donald Trump.

The free dollar exceeds the barrier of 20 pesos on Monday and is trading at 20.17 pesos in banks, 37 cents more than last Friday’s night, in line with what was expected by financial analysts. “The economic and financial uncertainty about what will happen with the new airport project after knowing the results of the consultation makes the peso lose value against the dollar and makes the markets nervous,” said Dr. Alejandro Díaz Bautista, an economist and National researcher of the Conacyt as well as research professor at El Colegio de la Frontera Norte (El Colef).

The peso plummets on Monday, October 29, beyond 20 per dollar after the cancellation of the New Mexico International Airport (NAIM), which is set to record its worst day since the election victory of US President Donald Trump in November 2016.

On Sunday, the results of the consultation organized by the incoming government in which he lost the option of continuing the works of the air terminal in Texcoco that had started since 2015 and that had an advanced work of more than 30%, were known.

The weakness of the Mexican currency against the dollar is basically explained by the recent comments made by President-elect Andrés Manuel López Obrador regarding the results of the citizen consultation for the construction of the new airport in Mexico.

The elected president, Andrés Manuel López Obrador, confirmed that the construction of the Texcoco airport is canceled, and stated that shortly, the construction of two runways in Santa Lucía will begin, as well as the reconditioning of the current airport and the Toluca’s.

The rating agency Moody’s downgraded the bonds of the New Mexico International Airport (NAIM) to Baa3 and placed them in a negative outlook after the president-elect announced the cancellation of the project.

The terminal project contemplated the issuance of green bonds abroad for 6,000 million dollars.

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