When things go wrong in mexico these days, they tend to go very wrong. Still reeling from the devaluation of last December, the peso, Mexico's fragile coin of the realm, and the economy it lubricates are in trouble again. And no one knows exactly why. Some blame bottom-feeding currency speculators, others the stumbling administration of President Ernesto Zedillo. Still others mention a rumor, apparently unfounded, that a military coup is afoot.

Whatever the reasons, the crisis is real and writ large in plummeting exchange rates. In the past two weeks, the peso has dropped as much as 26% against the U.S. dollar. Last Thursday the currency hit an all-time low of 8.5 to the dollar, forcing the Bank of Mexico to step in 15 minutes before the close of trading to buy up more than $150 million in pesos. The central bank cited the peso's "extremely volatile behavior" as justification for the unusual move. The intervention proved moderately calming: by week's end the peso had moved up to 7.55 per dollar, still a 17% decline from September.

The currency convolutions threaten to derail the recovery Zedillo has promised for next year. Interest rates have been driven up by more than 20 percentage points--to a stunning 55%--in an effort to crimp borrowing and make investment in the peso more attractive. But higher interest rates will further depress a domestic economy that has already lost more than 1 million jobs in the past 10 months.

"The patrimony of many Mexicans is being wiped out--again--less than a year after the last collapse," says Roberto Salinas de Leon, executive director of cisle, a private economic think tank based in Mexico City. "Everything is at a standstill. The first quarter of '96 is already lost."

Officials of the Zedillo government say they have done everything possible to stabilize the economy, including balancing the national budget and keeping the money supply in check. "We don't see any reason why there should be a run on the peso," says David Suarez, a spokesman for Finance Minister Guillermo Ortiz. "This makes no sense."

Economists point to some strong negatives: the gross domestic product is expected to decline 5% this year, inflation is running at 50%, and the government's recovery goals for 1996 may be unrealistic. Indeed, the reeling of the peso coincides with the release two weeks ago of the government's most recent economic plan.

The problem, say analysts, is partly Zedillo. "People don't think Zedillo can pull it off," says Salinas. "They think he is doing many of the right things, but can't make them work." Adds a Mexico City businesswoman: "I've never felt people so scared."

What the President needs to do, some say, is to take dramatic political action--a reshuffling of his Cabinet, including the firing of Ortiz. But few expect such a move at this time; Ortiz, after all, helped craft the 1996 budget that Zedillo will present to the Chamber of Deputies this week.

Meanwhile, Mexicans are bracing for a rough ride ahead. "It's going to get worse before it gets better," says economist Rogelio Ramirez de al O, echoing predictions that the peso could fall as low as 12 to the dollar within the next few months. Why? In the current panicky climate, the answer doesn't seem to matter.

--By Michael S. Serrill. Reported by Laura Lopez/Mexico City