The Mexican peso lost almost 3% of its value against the United States dollar on Wednesday after the World Health Organization (WHO) declared the novel coronavirus Covid-19 a pandemic.

The declaration, along with the United States government’s failure (to date) to announce stimulus measures to combat the economic effect of the spread of the infectious disease, led investors to stay away from assets that are considered risky, such as the peso, the newspaper El Financiero reported.

Trading closed on Wednesday with the peso at 21.38 to the US dollar, a decline of 60 centavos or 2.89%. The currency’s closing level was the worst since January 2017, El Financiero said. 

A single greenback was buying an average of 21.5 pesos at banks on Wednesday, a 1.9% increase compared to the 21.1-peso average recorded on Tuesday.

The peso briefly fell to more than 22 to the US dollar early Monday after a sharp decline in global oil prices caused by a price war between Saudi Arabia and Russia but had recovered to 20.77 at the close of trading on Tuesday, according to data from the Bank of México.

The rapid global spread of Covid-19 is posing a huge economic threat to markets around the world.

“We have no idea when the coronavirus, the spread, is going to subside. That uncertainty is going to continue to create a lot of volatility,” said David Spika, president of GuideStone Capital Management. “We have no idea how to model it, we have no idea what to expect from it.”

United States President Donald Trump said that he planned to make a formal statement on Wednesday night on the growing  coronavirus outbreak and how his government would respond to it.

Earlier on Wednesday, WHO Director-General Tedros Adhanom Ghebreyesus told a press conference that there are now more than 118,000 cases of the disease in 114 countries, and that 4,291 people have lost their lives.

“In the days and weeks ahead, we expect to see the number of cases, the number of deaths, and the number of affected countries climb even higher. WHO has been assessing this outbreak around the clock and we are deeply concerned both by the alarming levels of spread and severity, and by the alarming levels of inaction. We have therefore made the assessment that Covid-19 can be characterized as a pandemic,” he said.

There are currently only eight confirmed cases in Mexico but the numbers are expected to increase, especially considering the growing number of cases in the United States.

If a widespread outbreak occurs in Mexico, the nation’s healthcare system will struggle to provide adequate treatment to all those who require it, Mexico City infectious disease specialist Francisco Moreno Sánchez said Tuesday.

The Mexican economy, however, is well fortified amid the current global volatility created by the spread of coronavirus and other factors, according to Finance Minister Arturo Herrera.

Source: El Financiero (sp)