Mexicans Doubt Peso Plan Will Bring Relief
MEXICO CITY — MEXICANS reacted with skepticism to an emergency plan for wage and price controls and budget cuts intended to stabilize the battered peso and hold down inflation.
The plan, announced Tuesday by President Ernesto Zedillo Ponce de Leon after marathon negotiations with businesses and unions, failed to keep the peso from weakening further. It slid from 4.925 to close at 5.325 to the US dollar on Tuesday. The peso has dropped nearly 40 percent against the dollar in the past two weeks.
President Zedillo called for a special session of Congress to consider the plan, in which business leaders pledged to refrain from raising prices on all but imported goods, and workers were ordered to do without substantive wage hikes following the peso's steep slide.
``One thing is clear,'' says Marta Alcantara, who sells soft drinks from an ice-filled bucket on a Mexico City street. ``We poor folks will be hurt the most.''
``This so-called unity accord won't do anything to help us get out of this crisis,'' adds news vendor Alfonso Alfaro.
Traders said they had hoped for more details and doubted the plan would bring the economic crisis under control.
In New York, investors said it appeared Zedillo's administration was having difficulty grasping the gravity of the economic crisis.
The plan ``looks very disorganized and confused,'' says Jean van de Walle, a vice president with Alliance Capital Management in New York. ``One does not get the sense that anyone is in control here.''