Mexico’s Peso Problems Are a Warning Sign for Global Investors

12/8/16 Bloomberg Markets

pesomexicanoThe world has never been so invested in Mexico, and so Mexico has never posed a bigger potential threat to the world. With a little more than six weeks before Donald Trump takes over with an agenda that could batter Latin America’s second-largest economy, Mexico is already showing signs of strain. Inflation is bouncing back, and traders bet it will only get worse; the peso has plummeted to record lows, and top analysts predict more pain; the government has lowered its growth forecast for four straight years, and Mexico is on the verge of a credit-rating cut just as Agustin Carstens gears up to leave the central bank after seven years at the helm.

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Mexico’s Central Bank Chief to Take International Post

12/1/16 The New York Times

carstensMEXICO CITY — The governor of Mexico’s central bank, Agustín Carstens, said on Thursday that he would leave his position next July, adding to the uncertainty that has rattled the country’s economy since the election of Donald J. Trump.

Mr. Carstens, 58, a well-regarded economist, will leave the Bank of Mexico, where he has been governor for seven years, to lead the Bank for International Settlements, a financial institution based in Basel, Switzerland, that acts as a bank for central banks.

It is a complex time for Mexico, as worry mounts that Mr. Trump as the United States president will make good on his campaign promises to renegotiate the North American Free Trade Agreement and deport Mexican migrants, anxiety that has pushed the value of the peso down to record levels.

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Mexico holds off emergency measures as peso tanks on Trump win

11/9/16 Reuters

6732357797_64d2ba3cdc_mMexico’s peso remained under pressure on Wednesday morning, weakening past 20 pesos per dollar after Donald Trump’s surprise U.S. presidential election win, but local authorities held off announcing any immediate mitigating economic measures. After plunging to its weakest-ever levels overnight as Trump forged toward victory, in its biggest fall since the 1994 Tequila Crisis, the peso then recovered slightly. But it was down 10.35 percent at 20.2165 per dollar in early morning trade.

Trump’s threats to rip up a free trade agreement with Mexico and to tax money sent home by migrants to pay for building a wall on the southern U.S. border have made the peso particularly vulnerable to events in the race for the White House. Several economists had expected a snap interest rate hike, but central bank Governor Agustin Carstens said on Wednesday morning the bank would take any necessary measures pending market conditions and hold a monetary policy meeting next week, but did not announce any immediate steps to support the currency.

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Mexico market volatility could ease if Trump situation ‘resolves itself’: cbank governor

10/12/16 Reuters

carstensMexico’s central bank governor Agustin Carstens said on Wednesday that volatility in local markets could ease if the situation involving U.S. Republican Presidential hopeful Donald Trump “resolves itself.”

Noting that Trump has made “very specific” comments about Mexico, Carstens told local radio that “everything points to this resolving itself and let’s hope that is the case. And from then on, I expect that we could see much less volatility in our markets.”

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Mexico’s Carstens says will consider using IMF credit line -paper

10/10/16 Reuters

carstensMexico will consider using its $90 billion flexible line of credit with the International Monetary Fund in the event of an external shock, the head of the country’s central bank said in an interview published on Monday.

“It doesn’t mean we will immediately use it, but we’ll have to evaluate the circumstances and be prudent,” said central bank Governor Agustin Carstens in an interview with El Economista newspaper.

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Mexico’s Carstens warns on protectionism

08/29/16 Financial Times 

Agustin_CarstensProtectionist trends in leading economies are threatening the world’s already laggardly growth potential, the head of Mexico’s central bank has warned.

Agustín Carstens, the governor of the Bank of Mexico, said that anti-globalisation demands were not confined to the US, where Donald Trump has been vowing to rip up trade deals, but were visible across a range of G20 countries.

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Transcript: WSJ’s Interview with Bank of Mexico Governor Agustín Carstens

07/11/16 The Wall Street Journal

agustin_carstens
Agustin Carstens

Bank of Mexico Governor Agustín Carstens spoke with Juan Montes, David Luhnow and Anthony Harrup of The Wall Street Journal at the central bank’s headquarters in Mexico City on Friday, July 8, 2016.

He commented on the world economy in the wake of Brexit and the reasons why the Bank of Mexico opted for a bigger-than-expected half-percentage-point interest-rate increase on June 30.

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