If you were AMLO, what would you prioritize on your agenda today, Monday, March 9? The feminist march brought together more than 128,000 women in 10 of the 10 main cities in Mexico and millions of others joined national strike, Oil lost 25%, its worst one-day decline since 1991 and sets red lights on plans for Pemex. The peso lost more than 7% and crossed the imaginary barrier of 21.65 per dollar. This matters because the 4T megaprojects are quoted in dollars.
The week begins with fire on three fronts. Women, oil and dollar. We have a feminist national strike that will increase pressure on the government: how will the president and his cabinet respond to women’s demands? It is obvious that the demands transcend the federal government, we can also ask how the Judicial Power will respond? What will entrepreneurs do? Are we facing the embryo of a political movement that will shake the 4T? In a more pedestrian and pragmatic way, we have the right to ask: what will change in the police and in the way complaints are processed? Will there be changes to make public transport travel less aggressive for women?
Out of nowhere came a storm that reminds us that Mexico remains an oil country, or at least vulnerable to oil price movements. The lack of agreement between Saudi Arabia and Russia caused an earthquake in the markets that took 25% of the value of black gold and thrashed the exchange rate of the peso against the dollar. The Mexican mix did not operate yesterday, Sunday, but will reflect this drop on Monday at 6 in the afternoon. It will be around $ 27. Recall that it was at $ 57 in early January. Every dollar that falls is $ 1.1 million less in daily income. Public finances are protected by oil hedges, but Pemex is not. What adjustments will the largest Mexican company make to the new reality? Will there be changes in energy policy? Is there a budget cut? The questions are for AMLO, but also for the Secretary of the Treasury, the Secretary of Energy and the director of Pemex. Lack of appropriate answers can be more expensive than failing an exam. At stake is Pemex’s debt rating, and perhaps Mexico’s sovereign debt rating.
The fall in oil dragged the peso and now we have a new scenario: the Mexican currency is closer to 21.50 per dollar than the 20 it was just last Friday. The exchange rate fell more than 7% on Sunday and accumulates a 14% fall in less than three weeks. What will happen? Experience tells us that we can experience a recovery in the Mexican currency. It was beyond 22 pesos in that black November in which Trump won. Common sense warns us that we are sailing in rough seas: the coronavirus has not been contained and will continue to wreak havoc, in tourism, logistics, and the most globalized industries. What will happen to the exchange rate? Perhaps the time has come to abandon the strong weight narrative. For the government, red spots on inflation and on the costs of large projects light up on the board. In dollars, a large part of the budget of the Santa Lucia airport, the Maya Train and the Dos Bocas refinery are quoted. Will there be money for everyone?
The Mazatlan Post