The Mexican Peso Crisis

Inflation is one of the most talked about words in society that causes a big problem in economics today. Inflation is an increase in the overall prices of goods and services and a decline in the purchasing value of money. This exists when the money supply surpasses the goods and services that are available. For this commentary, I chose to pick the article In a Venezuela Ravaged by Inflation, ‘a Race for Survival’ that deals with the topic inflation.

The financial crisis in Argentina during the late 1990s and early 2000s resulted in severe issues with foreign debt, inflation, unemployment, and political turmoil for the country. Argentina not only suffered a currency crisis, but also suffered a political crisis. Fallout from the economic collapse was so severe the Argentinean population resorted to civil unrest and protest, which in turn exacerbated Argentina’s problems at the turn of the century. While other issues related to this financial crisis such as the impact on the lives of the Argentinean population or the political turmoil and corruption are certainly worthy of discussion, this paper will focus on the currency crisis and the Argentinean government’s role in this economic

Some background facts about Mexico: The place of advanced Amerindian civilizations, Mexico came under Spanish rule for three centuries before achieving independence early in the 19th century. A devaluation of the peso in late 1994 threw Mexico into economic turmoil, triggering the worst recession in over half a century. The nation continues to make an impressive recovery. Ongoing economic and social concerns include low real wages, underemployment for a large segment of the population, inequitable income

The foreign currency chosen in the comparison against the U.S. Dollar is the Mexican Peso (MXN) for the years of 2005 to 2010. The Mexican Peso has had a history of periods of stability that have been followed by periods of inflation and devaluations. In 1993 the Bank of Mexico introduced a new currency, the “new peso” which brought more stability to the economy. There was more demand internationally for Mexican stocks and treasury certificates known as Cetes, this kept the New Peso at a stable level of about 3.1 for most of 1993. After briefly reaching 11.50 to the dollar in the late 1990’s, the peso had several years of ups and downs, gaining to less than 10 to the dollar just before the global economic crisis of 2008. Since that crisis

Mexico is an intriguing global economy, being one of the largest economies of the globe, yet also the host of a large portion of poor people; in the country for instance, which has given the world the richest man alive (Carlos Selim), 51.3 per cent of the population live below the poverty line (Central Intelligence Agency, 2012). IN order to better understand the Mexican economy, it is useful to look at it through two distinctive lenses, namely the savings rate through the Solow model and the business cycles.

The financial crisis of 2008 has been described as the worst financial crisis the world has seen since the great depression, but there are now murmurings of the potential for an even greater financial crisis, a currency crisis, caused by the demise of the US Dollar. The Dollar has been the reserve currency of the world since it took over from the Pound at the end of world war two, but we examine if it is about to crash spectacularly?

The purpose of this report is to analyse the reasons for, the impact of, and the measures taken in response to the Mexican currency crisis of 1994-1995. The first objective is to assess the reasons for the crisis. Why did Mexico, a once immensely desirable investment destination become the bain of the international financial community following December 1994?

Before the 60’s Mexico has experience a growth in their economy that was called the “Mexican miracle” because of the growth from 3% to 4% in just few time. However, after this period of growth, what followed was decades of debt. “In the late 1960s, Latin America

Once every 12 years there is a unique opportunity to reinforce the bonds between Mexico and the United States, when our presidential election cycles coincide. For Mexico, the July 1 elections will be a crucial moment that will set the tone for our future and define the US-Mexico relationship for generations to come.

This triggered the worst banking crises in Mexican history (1995-1997) and the largest depreciation of the currency in one year; from 5.3 pesos per dollar to over 10 pesos per dollar between December 1994 and November 1995 to cause the most severe recession in Mexico, and therefore ushered in the Tequila

In modern times the peso has endured more or less stable against the US dollar and other major worldwide currencies. Although the peso has come under pressure from international recession that is becoming obvious in Europe, One thing that is apparent from making a approximate study of the historical information is that the strength of a currency has a direct relationship with the strength of the economy. As is apparent from the economic disaster experienced by Mexico, during the 1970s and 1980s, which is why the Mexican peso is experiencing distress. As most of the Mexican economy produces its income from exports therefore, it is suffering from a deepening crisis in the global market. On the positive side, the future of the Mexican peso is

Mexico’s economy is mixed. The government, its agencies and government-owned or –controlled companies are anticipated to lessen their typically dominant position in the areas of public utilities, telecommunication, and petroleum. Private enterprise is the primary factor with regard to mining, manufacturing, entertainment, commerce, and the service industries. This also includes construction and tourism as well. Foreign investment is mostly found in the industries of mining, manufacturing, and the financial sectors.

This investigation will study the question: to what extent did the United States involvement in Mexico impact Mexican economy? The years 1900-1920 will be the focus of this exploration to allow for an analysis of United States relation with Mexico before the revolution and during the Revolution as well.

In addition, in the decade leading to 1994, the government saw an increasing expenditure for various projects in the country. The result was an increased reduction in the funds of the government. Another more important factor was that the country experienced hyperinflation from 1985 through 1993. This period was also characterized by significant increases in debt loads of the financial sector, as well as the low oil prices that also contributed to the weakening of the Mexican economy (Mathur, 18). One would argue that the Mexican

With the large capital surplus largely arising from foreign investments to support the huge trade deficits in the Mexican current account, all seemed to go well for the Mexican economy until several political crises erupted and several macroeconomics mistakes were left exposed in 1994 which affected foreign investor’s confidence.