UPDATE 1-Mexican peso down over 5% from March peak, as banking fears spread

(Adds monthly comparison)

MEXICO CITY, March 17 (Reuters) - Mexico’s peso fell against the dollar again on Friday as markets continued to show fears about a banking crisis in the United States, marking a drop of over 5% since its peak earlier this month.

It comes amid increased volatility for the currency in the past week amid fears of a broader financial crisis triggered by bank failures in the United States.

The peso was down by 0.86% at 11.50am local time in Mexico City (1750 GMT) on Friday against the previous day, dropping to 18.86 to the dollar, having slipped 5.1% from the high of 17.94 seen on March 3.

The peso seesawed against its U.S. counterpart this week as traders flocked to the safe-haven dollar, falling several percentage points from the start of the week at various intervals.

“The appreciation (of the peso) is due to the reduction of risk aversion in the global financial market,” analysts at Mexico’s Banco Base said. “However, additional upward pressures cannot be ruled out.”

The failures of

Silicon Valley Bank

(SVB) and Signature Bank last week have shaken markets in the U.S. and Europe.

Their collapses came as central banks have rapidly hiked interest rates to fight inflation, helping to depress the prices of older government bonds held by investors. (Reporting by Mexico City Newsroom, Writing by Isabel Woodford; editing by Diane Craft)