Investors are picking up on the benefits for Mexican silver miners of one of the biggest foreign exchange stories since November’s U.S. election, with the slide in the peso pushing costs lower while silver prices are ramping up.
The peso hit a record low last month at 22.03 to the dollar, pressured by concern over a potential trade war between the United States and Mexico in the wake of Donald Trump’s U.S. election victory.
While some say the worst of the currency’s slide may be over, the peso is expected to remain weak throughout this year, a Reuters poll showed this month.
Between 60 percent and 70 percent of silver miners’ costs in Mexico — from labor to power — are priced in pesos, an industry analyst estimates. For a company that sells its output in dollars, that suggests a significant benefit to cost margins.