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mexico economy

Trump’s threats take the Mexican peso to 20.69 per dollar

by Ethan Caldwell November 29, 2024

written by Ethan Caldwell

Mexico City. Two months before Donald Trump takes office as US president, he continues to shake the Mexican peso in his international operations.

The president-elect threatened Mexico and Canada with extra 25 percent tariffs from his first day in the White House. As soon as his message began to circulate on his social network, Truth, the Mexican currency accelerated its weakness against the dollar and operates above 20.6921 pesos per dollar.

And the Mexican peso had returned to gains this Monday against a dollar that weakened worldwide. After three consecutive downward closings, the Mexican currency appreciated 1.04 percent, equivalent to 21.31 cents against the US currency, to 20.2788 pesos per spot dollar.

The Mexican currency had received with stability the appointment of Scott Bessent as Secretary of the United States Treasury under the new administration of Donald Trump. While the dollar deflated, as its DXY index, which measures the behavior of the US currency against a basket of six international currencies, fell 0.62 percent, to 106,842 units.

However, a few minutes ago it was announced about the additional tariff to be imposed from Trump’s first day in the White House, which will be 25 percent for Mexico and Canada and 10 percent for China. In the case of the two North American countries, it will also continue if irregular immigration is not stopped.

According to analysts, Trump brings a lot of volatility to the exchange market, given the threat of taxes on Mexico, Canada and China.

#Trumps #threats #Mexican #peso #dollar
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November 29, 2024 0 comments

Business

HR Ratings changes perspective of Mexico; goes from stable to negative

by Ethan Caldwell November 29, 2024

written by Ethan Caldwell

HR Ratings changed Mexico’s outlook from stable to negative and ratified the short- and long-term sovereign risk ratings, the firm reported in a statement.

This is the second change in perspective for Mexico, since last Thursday, November 14, one day before the Ministry of Finance and Public Credit (SHCP) delivered the 2025 economic package project to the Chamber of Deputies, Moody’s carried out the same change, from stable to negative.

Today, HR Ratings explained that the change is the result of the deterioration in its estimates of economic growth in 2024 and 2025 for Mexico, as well as its expectation of a slower reduction in the fiscal deficit for 2025, compared to what was estimated by the SHCP, which which could put pressure on net debt as a proportion of Gross Domestic Product (GDP).

“The reduction in our growth expectation for the sovereign is the result of the negative behavior that industrial activity has shown during the last 12 months, especially due to the lower dynamism of the construction sector, in addition to a slowdown in the manufacturing sector and lower demand. external,” he assured.

He added that the change of administration expected in January 2025 in the United States could lead to a deterioration in the commercial relationship with Mexico’s main trading partner, and therefore continue to negatively affect the performance of economic behavior.

“With this, we expect economic growth in 2024 to be 1.4 percent and 1.1 percent for 2025, which is lower than expected by the Treasury in the General Criteria of Economic Policy (CGPE25).

In turn, it is less than expected by HR Ratings in April, when an advance of 2.5 and 2.0 percent was estimated for 2024 and 2025, respectively.

He detailed that the decrease in the expectation of economic performance and a greater depreciation of the exchange rate compared to the estimate in April would lead the historical debt balance at the end of 2024 to 52.24 percent of GDP, which is higher than previously expected in the HR Ratings projections of 50.76 percent.

Maintains investment grade

For its part, the SHCP highlighted in a statement that Mexico maintains the investment grade with the eight rating agencies that evaluate its debt.

“During 2024, all of them have ratified the rating of the Mexican sovereign debt, reflecting confidence in the country’s macroeconomic stability,” he stated.

He explained that the change in perspective does not mean a downgrade in the rating, but rather represents a precautionary adjustment to the risk balance that the agency has made.

“We consider that the growth outlook for Mexico is positive, given that supply shocks have begun to decrease and industrial production has shown better dynamism since the second half of the year,” he assured.

“For this reason, our growth forecast, presented in the Economic Package for 2025, remains between 2 and 3 percent, supported by the strength of domestic demand, the support of social programs and investment in strategic sectors,” said the SHCP.

He commented that the Economic Package was prepared on a realistic and prudent basis, considering the current economic situation and both internal and global risks.

He mentioned that projections were established that guarantee responsible fiscal consolidation, both in the short and long term. Mexico is the United States’ main trading partner, and the USMCA provides a framework of certainty for national and international investments.

He stated that the debt of the Government of Mexico maintains a solid attractiveness in international markets, demonstrating a resilient profile in the face of economic fluctuations and financial volatility.

“Additionally, Mexico has the necessary fiscal buffers to mitigate possible adverse scenarios in the global environment, reaffirming the commitment of the Ministry of Finance to prudent management that reaffirms the strength of public finances and the sustainability of the debt,” he concluded.

#Ratings #perspective #Mexico #stable #negative
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November 29, 2024 0 comments

World

Moody’s changes outlook on Mexico’s sovereign debt rating to “negative”

by Ethan Caldwell November 20, 2024

written by Ethan Caldwell

Mexico City. The ability of the new Mexican government to reduce the fiscal deficit, which in 2024 will be around 6 percent of gross domestic product (GDP) “is limited by an increasingly rigid spending structure and a reduced income base,” Moody’s said this Thursday, announcing a change from “stable” to “negative” in the outlook for the country’s sovereign debt rating.

The change in perspective – which does not affect the level of investment – is also due to the fact that, according to the rating agency, the reform of the judicial branch has the potential to “substantially alter checks and balances, as well as the business environment in Mexico.

In response, the Ministry of Finance stated that the rating agency made its assessment without having the elements of the expenditure budget and fiscal policy for 2025, which will be presented tomorrow to Congress.

“This situation suggests that Moody’s analysis and perspective could have benefited from a more detailed and updated evaluation,” the Treasury said.

“At the time of its Council, the agency did not have information on the 2025 Budget, the proposed fiscal policy for next year or the projections that the Ministry of Finance will deliver to the Congress of the Union tomorrow,” he added.

The rating agency, for its part, explained that the change in perspective is due to a weakening of the institutional and policy-making framework that could undermine fiscal and economic results.

“The deterioration of debt affordability and greater rigidity in public spending make fiscal consolidation difficult, following the increase in the public deficit this year, a departure from a history of low deficits, regardless of economic pressures,” he stated.

He added that Mexico’s constitutional reform could weaken the checks and balances of the judicial system, with a possible negative impact on the country’s economic and fiscal strength.

In turn, he reported that there is a greater probability that the contingent liabilities derived from Petróleos Mexicanos – which has a negative outlook – will materialize on the government’s balance sheet and, at the same time, will not restore the sustainability of Pemex’s long-term debt. and therefore maintain fiscal risks for the government.

Regarding the affirmation of the sovereign risk rating, Moody’s said it reflects that Mexico’s credit profile continues to benefit from solid economic strength that will continue to be supported by the diversity of the economy, as well as the possible benefits of nearshoring .

Moderate macroeconomic imbalances, thanks to a history of relatively prudent fiscal and monetary policies, support the rating.

For its part, the Ministry of Finance mentioned that the arrival of new investments in the country, motivated by the relocation of companies due to trade tensions between the United States and China, offer significant potential for economic growth and reflect Mexico’s strategic position in the global business landscape.

He said that the debt of the Government of Mexico maintains a solid attractiveness in international markets, demonstrating a resilient profile in the face of economic fluctuations and financial volatility.

“Additionally, Mexico has the necessary fiscal buffers to mitigate possible adverse scenarios in the global environment, reaffirming the commitment of the Ministry of Finance to prudent management that reinforces the strength of public finances and the sustainability of the debt,” he said.

#Moodys #outlook #Mexicos #sovereign #debt #rating #negative
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What are⁤ the key factors‍ that influenced Moody’s change of outlook on Mexico’s sovereign ⁣debt rating, and how might these challenges interact with‌ the judicial reform efforts underway in the country?

1. Could you please provide your insights on the reasons behind Moody’s ⁤decision ⁢to change the ‌outlook on Mexico’s sovereign debt rating from “stable” to “negative”‌ due to ⁣the ⁢challenges related to fiscal deficit and spending structure, as well as the potential ‌implications of the ongoing judicial reform on the country’s economy and financial stability?

2. How do you anticipate the new Mexican government will address these‍ issues, given the constraints they face in terms of fiscal deficit reduction and limited room for fiscal policy ‍maneuvering?

3. What‍ measures are being taken by the Mexican Ministry of Finance to ensure that the upcoming budget for 2025 will provide a more sustainable⁣ path towards reducing fiscal deficits and maintaining investor confidence in the⁢ country’s economic prospects?

4. How do you assess the potential risks ‍associated with the proposed constitutional reform on Mexico’s ⁣economic and fiscal framework, particularly regarding the ⁣independence of ‌the judiciary and the potential impact on the country’s business environment?

5.⁢ Given the ongoing geopolitical tensions and economic uncertainties globally, what impact do you‍ foresee for⁤ Mexico’s economy ‌in the short to medium term, particularly with‍ respect ⁤to nearshoring and the ‌relocation of businesses seeking alternative markets?

6. To what extent does the recent debt downgrade by Moody’s reflect the⁢ current state of Mexico’s⁢ macroeconomic imbalances, and what are the government’s strategies to mitigate these risks and promote long-term fiscal sustainability?

7. Lastly, could you elaborate on the main⁣ factors ⁣that contributed to Moody’s decision to maintain Mexico’s sovereign risk rating at its current⁣ level, ⁣despite ‌the negative outlook, and how do you anticipate these factors will shape the country’s economic future in the coming ⁢years?

November 20, 2024 0 comments

Business

Family businesses ask Sheinbaum for his support to boost the Mexican economy

by Ethan Caldwell October 8, 2024

written by Ethan Caldwell

Mexico City, The Hispanic American Center for the Business Family (CHFE) asked President Claudia Sheinbaum Pardo that her government be an ally so that family businesses continue contributing to the dynamism of the Mexican economy.

“We are convinced that under your leadership, family businesses in Mexico will find fertile ground for their growth and expansion,” he said in a letter addressed to the president.

The organization asked the new federal administration to “be the ally, support and promoter that millions of Mexican business families need to continue injecting dynamism into our country.”

The group expressed that with the arrival of Sheinbaum Pardo to the Presidency of the Republic, a new stage begins for the nation, as they considered that she is “a woman committed to economic development hand in hand with social and environmental development.”

“His success in the administration will also be the success of millions of business families who contribute to the progress of Mexico every day,” the organization commented.

The CHFE highlighted that the T-MEC is a platform for economic integration that presents great opportunities for Mexican family businesses, which represent more than 90 percent of the country’s small and medium-sized businesses.

In the same context, he commented that only with the necessary tools, family businesses will survive in the new era marked by relocation.

#Family #businesses #Sheinbaum #support #boost #Mexican #economy
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October 8, 2024 0 comments

Business

Mexican peso recovers against the dollar; closes at $19.62

by Ethan Caldwell October 4, 2024

written by Ethan Caldwell

Mexico City. After the Bank of Mexico did not copy the same dose of interest rate cuts as its US counterpart this Thursday, the Mexican peso recovered against the dollar.

At the close of the session in the interbank (wholesale) market, the Mexican currency registered a daily appreciation of 0.09 percent, equivalent to 1.75 cents, to conclude at 19.6225 pesos per spot dollar. The above, after the previous depreciation of 1.57 percent, which took the Mexican currency to 19.64 per dollar.

In the midst of solid economic growth in the United States and the push of the commoditiesafter the authorities in China will intensify their efforts to reactivate efforts, the exchange rate oscillated this Thursday between a maximum of 19.7540 units and a minimum of 19.5400 units, according to data from the Bank of Mexico.

The Mexican monetary authority fulfilled the script of most analysts who expected a cut in the cost of credit of 0.25 percentage points and, it emphasized, that on this occasion it was not going to copy the Federal Reserve (Fed), who surprised the last week with a decrease in its rate by 0.50 percentage points, as expected by another part of the specialists.

Before the opening of the American markets, the The United States Bureau of Economic Analysis announced that the US economy definitively expanded by 3 percent during the second quarter of 2024, which for the moment alleviated fears of an economic recession as Mexico’s main trading partner moves away.

“The update primarily reflected upward revisions to private inventory investment and federal government spending offset by downward revisions to nonresidential fixed investment and exports,” the report stated.

Meanwhile, initial applications for unemployment benefits in the United States fell again last week, this time by 4 thousand, to stand at 218 thousand; While durable goods orders did not rise in August, those of the control group did by 0.5 percent monthly, against the expected 0.1 percent.

Metals rise

In addition, Chinese President Xi Jinping and the Politburo asked to fiscally stimulate the economy to achieve growth objectives, for which it plans to inject one trillion yuan into its state banks to increase support, since an increase is expected. in banks’ core gold reserves, boosting demand for the metals.

Gold reached levels of $2,700 per troy ounce; while copper rose to $4.6480 per pound, a gain of 3.53 percent.

The historical levels of the prices of gold and copper, mainly, supported the shares of mining companies, so that together with them, in the Mexican Stock Exchange, and hand in hand with the highs on Wall Street, it gained 0.75 percent, equivalent to 399.59 points, to 53 thousand 590.52 units.

Fresnillo’s share price rose 21.69 percent; while the securities of Grupo México rose 4.23 percent and those of Peñoles, 4.23 percent, being among the stations that gained the most in this Thursday’s session.

The Price and Quotation Index (IPC) of the BMV managed to reach 54 thousand points during the morning session, but the declines in Walmart shares of 1.78 percent; of Oma, 2.14 percent, counteracted the optimism.

The three main US indices rose. The Dow Jones Industrial Average gained 0.62 percent, to 42,175.11 points; The Nasdaq, with a large technological presence, rose 0.58 percent, to 18 thousand 187.12 points. The S&P 500 advanced 0.40 percent to 5,745.37 points and is on track for its best performance during the first three quarters of the year since 1997.

Declines return to the oil market on the prospect of Saudi Arabia abandoning its unofficial price target of $100 and preparing to increase production. The barrel of Brent drops to $71.60, with a drop of 2.53 percent; compared to the $67.67 price of West Texas crude oil, the benchmark in the United States, with a decrease of 2.9 percent.

#Mexican #peso #recovers #dollar #closes
– 2024-10-04 18:38:17

October 4, 2024 0 comments

Business

The weight deflates; closes at 19.29 units per spot dollar

by Ethan Caldwell September 30, 2024

written by Ethan Caldwell

Mexico City. In the midst of the decision of the United States Federal Reserve (Fed) to cut its reference rate by half a percentage point and in the face of risk aversion with respect to Mexico, the Mexican peso tried to maintain its winning streak, but in the end it deflated .

The Mexican currency registered a daily depreciation of 0.81 percent, to close at 19.2941 pesos per spot dollar, which ended four consecutive rising sessions.

According to data from the Bank of Mexico (BdeM), the exchange rate operated between a maximum of 19.3890 units and a minimum of 19.1530 units.

La Fed has decided to begin the decline in interest rates with a bang and left the price of money in the range between 4.75 and 5 percent, after days of speculation in which the financial markets debated between 0.25 and 0.50 percentage points as the first decrease.

The Base analysis area highlighted that It is circulating in the media that Rogelio Ramírez de la O, Secretary of the Treasury, could leave his position after the presentation of the 2025 Economic Package, which has a deadline of November 15. “If this is the case, risk aversion could increase, since the market is waiting for the Ministry of Finance to consolidate public finances next year, reducing the budget deficit from an estimated 5 percent of GDP in 2024.”

Meanwhile, the dollar index, which measures the behavior of the dollar against a basket of six international currencies, showed a recovery of 0.06 percent, to close at 100,625 units.

Stocks on Wall Street closed modestly lower on Wednesday after the Federal Reserve ended days of speculation about the magnitude of the move.

The main US stock indices entered and left positive territory after the Federal Reserve’s decision: the S&P 500 lost 0.29 percent, to 5,618.26 points; The Dow Jones index fell 0.25 percent, to 41,503.10 points, and the Nasdaq fell 0.3 percent, to 17,575.67 points.

For its part, the Mexican Stock Exchange (BMV) advanced 0.59 percent, to close at 52,582.89 points.

Oil limited its losses on Wednesday after remaining in the red for almost the entire session, helped by the interest rate cut decided by the Federal Reserve.

The price of a barrel of North Sea Brent for delivery in November fell a marginal 0.07 percent, to $73.65. The barrel of West Texas Intermediate (WTI) for delivery in October fell 0.39 percent, to $70.91.

#weight #deflates #closes #units #spot #dollar
– 2024-09-30 08:56:33

September 30, 2024 0 comments

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