Guadalajara -
The director of Mexico's central bank had good news today for those who are paid in or hold the moneda nacional - the peso. The government has no plans to tamper with what it regards as a stable currency.
Banixco chief Agustín Carstens said the peso is on solid economic footing - "well anchored" - and he ruled out any possibility of a currency devaluation.
Carstens' comments echoed those of president Enrique Peña Nieto, who last week told a U.N. economic summit in Santiago, Chile that Mexico's economy is firing on all cylinders, with anticipated 2013 growth of up to 4%. Peña Nieto attributed the stability to low inflation, and above all, to a modest ratio (34%) of national debt to gross domestic product (producto interno bruto, or PIB, in Mexico). Mexico poised for 4% growth in 2013. Carstens concurred with those appraisals today.
The news will be a relief to anyone old enough to remember the Mexican peso crisis of 1994. The peso shot from four to the dollar to 7.2 in the space of one week, wiping out the savings of millions of citizens and the liquidity of many businesses virtually overnight. The U.S. intervened to help prop up Mexico's currency, and the peso eventually recovered. But bitter memories remain for those affected.
The peso closed today, Jan. 28, at 12.75 to the dollar. (Dec. 31 - Dollar falls unexpectedly against Mexican peso, as U.S. goes over fiscal cliff).
On Jan. 11, the U.S. educated Carstens delivered bad news to investors north of the border. He predicted that the American economy will remain stagnant in 2013, with maximum growth of 1.9%. But Carstens said growth could just as easily be zero, especially if the approaching debt ceiling battle in Washington is a replay of the recent fiscal cliff fiasco. Banxico chief: grim prognosis for U.S. economic growth.
Jan. 30 - Mexico's Secretaría de Hacienda y Crédito Público - a federal agency equivalent to the U.S. Internal Revenue Service, Office of Management and Budget and Congressional Budget Office rolled into one - delivered a better than expected year end report for 2012 today. The country's economy grew exactly 4% last year, comfortably exceeding the projected 3.5%. The rate of inflation was 3.7%.
Mar. 8 - An anonymous reader sent this link along, but posted his Comment to an unrelated story. Here's the story: Analysis: Mexico central bank - closet currency warrior and inflation gambler.
Mar. 25 - Mexico's economy grew 3.24% in January, the National Institute of Statistics reported today, well on track to a projected annual expansion of 4% in 2013. That's quite likely to beat U.S. growth this year.
June 20 - Mexican stock market takes the down elevator with Dow
June 21 - Banixco raises storm flag warning on Mexican economy
Jan. 1 - Mexican stock market beat U.S., London, Brasil in 2012
July 31 - Mexican economy grew at more than double the U.S. rate in second quarter of 2012
Dec. 31, 2011 - Risk of a "catastrophic event" in 2012 has increased, says Mexico's central bank
These guys all lie. I guess you are too young to remember Lopez Portillo's immortal words: I will defend the peso like a dog.
ReplyDeleteWhat El Gordito does not mention is that Mexico's oil reserves and production are dropping like a lead ballon. Down from the beginning of Calderon at 3 mbd to less than 2.5 mbd today and falling. It is too late to play catch up with private sector input. There will be a crisis in a couple of years.
Perhaps the missing half mbd was stolen by drug thugs?
DeleteThanks for your insight . . . after I've told MGRR readers that the peso is a currency they can bank on. Tomorrow morning everyone who has read this may decide to dump their moneda nacional, in favor of euros - but wait, that currency may end up being used for wallpaper later this year.
ReplyDeleteAs for Lopez Portillo, I should remember him well, since he was Mexico's president (1976-1982) when Jimmy Carter was ours. But I have utterly no recollection of him.
BTW - that comment, "I will defend the peso like a dog." How, exactly, does a dog defend a peso?
ReplyDeleteEdward,
You should study the Portillo period. It set the stage for today's "modern" Mexico. He, along with Echeverria, are the founders of the Old/New PRI we see today.
In Mexico, as you well know, people are terrified of dogs. Thus the reference. Unfortunately, for Portillo world events took his gold mine down to $10 dollars a barrel. With regard to the Euro, you are correct. However, a worthless Euro does not a strong peso make. Oil is all Mexico has and without it we would be right up there with Honduras. Take a look at the Federal budget and see how much is dependent on oil. That is why you have the gasolinazos every month.
http://www.mexicogulfreporter.com/2013/01/mexican-peso-well-anchored-says-central.html#comment-form
"Pemex aportó un billón de pesos al erario pero perdió $34 mil millones" from today's La Jornada
ReplyDeleteNot bad, in english that is a trillion pesos they contributed to the government bottom line but they lost 34 billion pesos. Looking good!!!
Yes, the NARCOS steal hundreds of millions from PEMEX in a variety of ways. Mainly, directly from the pipelines. But that has already be counted as production, which is different from "OFFICIAL" sales.
You're quite right about narco theft of fuels, direct from pipelines and storage facilities. That's a topic which is commonly reported in the Spanish press. It graphically illustrates how diversified the Mexican cartels are - like all successful businesses, of course. In fact, it's far more accurate today to use the term "organized crime" instead of "drug cartel." All of them traffic in narcotics, to be sure, but they have many "sidelines" as well - extortion, kidnapping for ransom, "cobro de piso" ("floor charges" which businessmen must pay if they want to stay in business, and if they want to continue living, etc.)
DeleteHere's a January 2012 MGRR piece on a reporter who was murdered by sicarios, probably for investigating petrol theft:
http://www.mexicogulfreporter.com/2012/01/mexican-journalist-deaths-continue-to.html