The economic and financial scenario for the coming months in our country is “drawn”, unless something happens that diametrically changes things.
We can say that, in this scenario, there is good news and bad news, and what happens in the world will depend on how much one benefits us and how much another harms us.
Exchange rate, we kill the demons
A few years ago, exchange rate turbulence hit our country hard when global volatility increased.
This does not mean that it will not happen, but at least in the immediate future there are factors that make the peso a relatively stable currency.
The best test came last week, when the central banks of England and South Korea intervened in their markets to try to stabilize their sinking currencies against the dollar.
Likewise, the central bank of China, which is not just any bank, advised the 5 largest commercial banks in his country to be prepared to intervene in the market, if necessary, given the strength of the “Super-dollar”; the Bank of Japan and the European Central Bank also signaled their concerns about what was happening in the foreign exchange markets.
meanwhile, in Mexico the peso remained within a floating range between 20.10 and 20.40 pesos per dollarnot bad if you consider the global exchange rate turbulence.
We have pointed it out many times, as long as our country maintains its rate differential with the United States, it will have little to worry about.
We must also recognize that public finances are relatively stable and that the fiscal discipline inherited from other administrations is maintained.
Unless something else happens to move the above, it is possible that the peso remains more or less solid, without great variations.
This will undoubtedly be good news because the Mexican economy will save several headaches with a stable peso that does not contaminate with more inflation.
Rates, the impact will be strong
A few months ago it was almost impossible to think that rates in Mexico would reach double digits.
Unfortunately, the most recent projections no longer only consider a double-digit rate for the short term in the Mexican economy.
Also, they expect that it could go beyond 10 percent, they already place a level of up to 11 percent and with risk to the upside.
In this way, the relative exchange rate stability will be thwarted by the most important adjustment of rates in this century, the new generations did not know, until now, of such high rates and inflation.
Rising rates will slow the economy, at best. But in the most negative scenario, which many already consider, there will be a recession stemming from this rate increase.
Some economists believe that even the best thing that could happen to Mexico would be a period of stagflation, that is, low or no growth with relatively high inflation.
This scenario would be better than a recession, which is always the least convenient scenario, but where the economy of Mexico and the world could go.
The risk of the previous scenario is that it reflects a very fragile economy and, as was said before: “an economy seized with pins”.
The latter is not exclusive to our country, but it is even more worrying since this same “drawn scenario” depends a lot on what happens outside our country, where neither the authorities nor the Mexican markets have a way of controlling what happens.
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