• Mexico means business for U.S., says Bradley University trade expert

  By Steve Tarter 
  Journal Star business editor 

   

  
  

  Donald Trump was propelled into contention as a presidential candidate last year calling for construction of a wall between the United States and Mexico. Trump also drew headlines with an accusation that some who entered this country from Mexico were rapists.

  Trump has made sealing the border a campaign issue, maintaining that Mexico will pay for his proposed wall while using machines made by U.S. companies like Caterpillar and John Deere to help build it.

  “(Mexico) is not our friend, believe me… they’re killing us economically,” said Trump.

  What Trump doesn’t talk about is that Mexico is this country’s third-largest trading partner, behind only China and Canada.

  Mexico buys almost as many U.S. goods as the European Union while an estimated 5.9 million U.S. jobs depend on trade with Mexico.

  We hear a lot about illegal immigrants but not about the more than 1 million legal border crossings that occur every day between Mexico and the United States. There are also over 1 million American citizens currently living in Mexico.

  It’s probably worth noting that over 20 million U.S. citizens visit Mexico every year, making it this country’s top tourist destination. Over 14 million Mexican residents visit U.S. locations annually, spending an estimated $10.5 billion, according to the Department of State.

  As director of the Turner Center for Entrepreneurship at Bradley University, Jim Foley, a frequent speaker on issues of international trade, estimates that he’s visited Mexico on business some 20 times.

  Foley sees a relationship growing between the two countries. Foley said that of the 50 to 60 companies that he’s worked with that look at the Mexican market, only one or two are involved with manufacturing in Mexico.

  “Most are selling products there — American-made products,” he said.

  Mexico has been very responsive to American companies like Starbucks, Subway, Costco and Home Depot, said Foley.

  As for security issues that are so often brought out, Foley said that when he was in Monterey, Mexico a year-and-a-half ago, “there was much more of a positive attitude than when I had been there five years before.”

  While a number of U.S. companies have opened plants in Mexico to take advantage of lower wages paid employees, Foley said the rebirth of American manufacturing is no illusion.

  “I’m seeing growing frustration with the challenges of overseas production as our own manufacturing techniques involve greater technology,” he said.

Mexico current account deficit swelled last year to its largest in at least 20 years, as a collapse in oil prices widened its shortfall in foreign trade, central bank figures show.

www.reuters.com/article/mexico-economy

MEXICO CITY — CNBC – Central banks in emerging markets could follow counterparts in the developed world and become “market makers of last resort”, using unconventional monetary policies to try to stimulate their flatlining economies, according to Mexico’s central bank chief.January 19, 2016 Ford Motor Co (F.N) will announce a new automobile plant in the central Mexican state of San Luis Potosi during the first quarter, three Mexican officials familiar with company plans said on Thursday.

www.cnbc.com/2016/01/17/mexico-bank-chief-calls-for-em-monetary-policy-action.html

Mexico Central Bank (Banxico) issues new procedures for daily auctions

The Exchange Commission today announced adjustments to its daily dollars auction. The main reason is that in recent weeks there is a more stable financial market performance.
 
The main adjustments are:
 
· To be suspended after November 23, 2015 the daily auctions for US 200 million dollars without a minimum price.
 
· The effective period for daily auctions with minimum price ranges will continue until 29 January 2016. The mechanism will remain the same as before. 200 million dollars will be auctioned daily if the exchange rate exceeds 1 % yesterdays price FIX.
 
· In addition, if the $ 200 million auctioned are exhausted, the Bank of Mexico will offer another 200 million, but now at a minimum price of FIX 1.5% above the previous day.
 
The maximum daily amount to be auctioned will remain 400 million from 23 November 2015 until January 29, next year.
 
The elimination of the daily auctions with no minimum price caused the peso back to trade above the $ 16.60 per dollar, after it had reached a minimum in the day of $ 16.55.

Global instability raises the dollar to historic lows in Mexico

The Mexico peso this morning has depreciated to a record low driven by the fear of slowing Chinese economy and the possible rise of interest rates by the Federal Reserve of the United States. The fall of today for the Mexican currency adds to a very difficult year. This is the 16th occasion in reaching a historic low in 2015 so far.

The strength of the dollar and the Chinese instability has caused the Mexican Peso to have a major devaluation in at least the past 15 years. The US Dollar is trading at 17 pesos. The Mexican currency has lost a quarter of its value it had when President Enrique Pena Nieto took office in December 2012.

The Mexican peso await more storms. On September 4th the US is expected to release employment levels, so it is expected that the Federal Reserve to  set new interest rates (which have remained between 0% and 0, 25% for seven years) on September 17. The situation could increase pressure on the Mexican currency. By then, the peso could reach up to 17.50 for each dollar, according to the economic analysis of Banco Base, Gabriella Siller.

A Chinese slowdown and the stronger dollar, added to other factors such as deepening of the Greek crisis and the fall in oil prices . The Mexico Peso has not been the only Latin American currency that has been affected by the global instability, the Chilean peso has lost at least 12% of its value so far this year and the Brazilian real by 23%.

The president of the Bank of Mexico, Agustin Carstens , said Wednesday that they will do “everything possible” so the economic instability do not increase inflation in Mexico, which is at record lows. Carstens said he is willing to raise interest rates in the Mexican central bank to keep inflation pressures, driven by the collapse of the peso. If the Fed, as expected, increased interest rates, it is expected that the Bank of Mexico do the same.