Tuesday, July 2, 2013

Peso, dollar remain volatile; Banixco has $169 billion USD banked abroad

Uncertain week for two currencies

*Updated Sept. 3*
Guadalajara -
Mexico's central bank, Banixco, reported yesterday that the peso should continue rising throughout the first week of July.

At the end of May the U.S. dollar staged a powerful rebound, trading at about 13.50 pesos by late June. But in the last week it has lost ground. The current exchange rate is under 13.

Banixco said that currency trading will remain volatile in expectation of June's employment report by the U.S. Dept. of Labor, which will be released in Washington on Friday.

Analysts in this country said that exchange rates will likely fluctuate between 12.75 and 13.05 pesos. Projections are made more difficult because Thursday is U.S. Independence Day, and American markets and banks will be closed.

Banixco recommended national institutions increase their dollar holdings if the price drops below 12.70, and reduce them if and when the price exceeds 13.10.

The central bank also reported yesterday that it held $166.53 billion in international deposits as of June 28, $154 million more than the previous week. Banixco said the increase was primarily due to changing currency exchange rates. Mexico had $163.5 billion dollars in foreign reserves as of Dec. 31.

Banixco reported that domestic cash on hand last week, including notes and obligations due the central bank, was 773.245 billion pesos. At an exchange rate of 13 pesos, that's about $59.5 billion USD, up 4% from one year ago.

The latter number is Mexico's basic money supply, known as MO. M0 is the most liquid measure of a nation's money supply, and includes cash, coins and demand notes (IOUs) in circulation, as well as other assets which are readilty convertible into cash. Money Supply M0 is called "narrow money," and theoretically represents all available liquidity in a country's economy in a particular moment.

July 5 - The U.S. economy added 195,000 jobs in June, the Dept. of Labor reported this morning. But that will not help reduce the official 7.6% unemployment rate - a number which does not include those working far below their educational or experience level, and those who have given up searching for a permanent position. In fact, the official underemployment rate was reported today at 14.3%.

Aug. 12 - Mexico's foreign reserves rose to $169.325 billion USD as of Aug. 9, Banixco has reported.

Sept. 3 - The U.S. dollar continues its climb the first week after Labor Day, hitting a buy price (gross value) of 13.44 Mexican pesos - meaning even sellers should be able to exchange for about 13 pesos.

Dec. 24 - Mexico had $176.55 billion USD banked on Dec. 20. Here's where the increase came from.

June 21 - Banixco raises storm flag warning on Mexican economy
June 20 - Mexican stock market takes the down elevator with Dow
June 12 - 59% of Mexicans remain trapped in underclass
June 12 - As peso continues its slide, Peña Nieto puts a trillion of them on the table

© MGRR 2013. All rights reserved. This article may be cited or briefly quoted with proper attribution or a hyperlink, but not reproduced without permission.

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