Causes Of The Mexican Peso Crisis

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People think it takes little to fix things since it took little mistakes to bring Mexico’s economy down. The Mexican peso crisis started because of the U.S. influence towards Mexico’s currency. The U.S. dollar has a significant value, and after the huge increased it had during the end of the year of 1994, the Mexican economy went down. People were choked and panicking, and investors were flying out of the country, making things even worse. What is the Peso Crisis? To begin with, the peso crisis started in December 1994 because of the sudden devaluation of the peso towards the dollar. As a matter of fact, this all took place after the new Mexican president was elected and took over the presidency. One of the biggest controversies at…show more content…
On December 1994 the dollar value went from 3.46 to 6.94 in March 1995. The drastic change in the Peso currency took Mexico’s economy to another level. The peso had been devaluated for more than 90%. Prices in Mexico went really high in a really short period of time; and as a matter of fact, that took their economy to destruction. Both presidents, Salinas and Zedillo, as economists, they must have had an idea on how decreasing the value of the peso against the U.S. dollar would affect their economy. On the other hand, after the government realized what they got themselves into, both presidents, Zedillo and Salinas, started blaming each other this crisis. Mexico’s economic crisis could have been prevented. In the first place, the actual president at the time, Ernesto Zedillo, had the smartest idea of telling the foreign companies and corporation, that had money invested in Mexico, that he (his government) was going to devaluate the peso (on his opinion which was a need at the time, but a not so smart idea on warning the companies that had invested a lot of money inside the country). Therefore, this generated the majority of the foreign capital to run away from Mexico, and let it sink. A dollar was being paid for 3 pesos, and after the devaluation, it was being paid a little over 6 pesos, and as of the present day of November 2017, it is valuated over 19 pesos per dollar. This
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