For Mexicans, Record-Setting Peso Dive Bigger Deal Than El Chapo

  • The currency hit a record low of 18.33 versus the U.S. dollar
  • Viral memes show Mexicans are not happy about depreciation

While the capture last week of the most wanted drug-trafficker Joaquin "El Chapo" Guzman set the world abuzz, it’s not the storyline most Mexicans are focusing on. For them, it’s all about the peso’s harrowing collapse to a record low against the dollar.

“Who cares about El Chapo? Stop the damn dollar!" reads one viral meme, a photo of Guzman being frog marched by police that superimposes an image of Benjamin Franklin’s head over the the billionaire drug lord’s. Another one with a picture of El Chapo reads “Don’t worry about me, kids, worry about the dollar being sold at 18.20." A Twitter user, who identifies herself as Patricia Barrenechea from the coastal state of Veracruz wrote: “This devaluation is more dangerous than Chapo."

The social-media laments come as Mexico’s currency has fallen 10 percent in the past three months, reaching a fresh record low of 18.3280 per dollar, as pessimism about the outlook for global growth and an oil rout sparked a selloff in emerging-market currencies. As the peso plummeted 2 percent Friday, the most among major currencies tracked by Bloomberg, the central bank auctioned $400 million in a bid to stem the volatility by flooding the market with dollars.

The central bank’s dollar auctions, which have been running since December 2014, expire at the end of the month and analysts predict they’ll be extended. Their effectiveness has been questioned, with Cantor Fitzgerald calling the intervention "mostly futile."

A week ago, central bank Governor Agustin Carstens spoke to reporters after a speech and said depreciation of the peso was “unavoidable" given external shocks, adding that the bank’s interest-rate increase last month, the first since 2008, was partly because of its concern for the currency. During the same event, Finance Minister Luis Videgaray said that Mexico is not immune to global aversion which is being driven by China and is hitting the exchange rate here.

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