MEXICO CITY – Mexico's peso continued to recover Tuesday from its steep drop last week, as experts denied the resurgence of a leftist candidate in polls on the July 1 presidential race had anything to do with the decline.
They said continuing concerns about Europe's sovereign debt crisis and the U.S. economy are the driving forces behind the currency's volatility.
"The elections aren't affecting the exchange rate in Mexico," said Ana Gonzalez, a currency exchange analyst for Grupo Financiero Monex. "It's going to move much more because of events in Europe and the United States."
The peso closed Tuesday at an interbank rate of around 14.23 per $1, after falling as low as 14.60 in trading last week. The peso closed at 14.39 on Friday and 14.24 on Monday. At the beginning on May, it was trading around 13.00 to $1.
The governor of Mexico's central bank, Agustin Carstens, said last week that investors' fears about a possible Greek debt default or its exit from the eurozone, as well as concerns about debt in Spain and Italy, were driving investors to seek safe havens, hitting emerging markets such as Mexico.
However, some media analysts reported that investors' concerns may have been fed by a poll released Thursday by the newspaper Reforma which said that centrist candidate Enrique Pena Nieto had 29 percent support, with Lopez Obrador close at 26 percent.
The poll was conducted in late May and had a margin of error of 3 percentage points. A month earlier, Pena Nieto had led the leftist 32 percent to 21 percent in the same poll.
Some business groups opposed Lopez Obrador during his failed 2006 presidential bid, claiming he would endanger private property and economic stability, accusations Lopez Obrador denied. The leftist has since sought to mend fences with the business community, and some claim he has grown too close to them. Tape recordings released last week suggest a supporter may have asked businessmen to pony up $6 million in campaign donations for Lopez Obrador, who claims the man was not acting on behalf of the campaign.
This week, other polls have since been released showing that, while Lopez Obrador does appear to be gaining on Pena Nieto, he is anywhere from nine to 14 points behind the front-runner.
On Tuesday, Rogelio Ramirez, an economist and adviser to Lopez Obrador, issued a statement saying that some news media "attributed the weakening (of the peso) to the polls, without any further evidence."
"The peso has weakened because of the financial crisis in the eurozone, and in particular Spain, and not because of any crisis in Mexico and much less because of polls on the presidential race."
Ramirez suggested Mexico might be more vulnerable to events in Spain because some of Mexico's largest banks are Spanish-owned. He said those banks account for 36 percent of deposits and 42 percent of profits in the Mexican banking system.