Thread: Mexico's peso soars but U.S. slowdown looms

Mexico's peso soars but U.S. slowdown looms
By Michael O'boyle
REUTERS

10:14 a.m. April 24, 2008

MEXICO CITY – Mexico's peso is soaring as high inflation keeps the central bank from cutting interest rates, but analysts see the currency faltering later this year once the U.S. economic slowdown likely hits Mexican exports.

Mexico's economy so far has largely shrugged off the downturn in the United States, its main trading partner, making it easier for the central bank to keep interest rates relatively high to fight a surge in inflation.

Investors, who like high interest rates because they increase returns, have responded by bidding up the peso's value more than 4 percent in 2008. Currently the peso is trading near a two-year high against the dollar.
High prices for Mexican crude exports, strong investment flows from abroad and optimism that Congress will pass a major energy reform bill are also boosting the peso.

Mexico isn't alone. Other countries in Latin America like Chile and Brazil have seen their currencies hit new peaks on booming commodity prices and higher local interest rates.

But analysts say a looming U.S. recession will eventually hit Mexico's peso by dulling demand for Mexican exports like cars and refrigerators.

“It's really just a question of how soon we see that,â€

This can't be . Bushco just said "Nafta is working great". Why would my beloved president lie to me

Everyone benefits from NAFTA except for us.

Now why are illegals flocking to our country. They would be better off at home.

Originally Posted by SarahPorter

Everyone benefits from NAFTA except for us.

Now why are illegals flocking to our country. They would be better off at home.

cause the Demos wants the votes and the gop ultra cheap labor