Wednesday, May 18, 2011

Mexican Peso Appreciation

Contrary to most of the mainstream press, the Mexican peso has, and is, growing stronger. Indicating that indeed a strengthening economy is at hand despite what the press would have one think. Foreign owners are jumping on board to own more bonds in Mexico. And this also means a good outlook for real estate value increases too.

According to a few sources, "As long as the peso keeps appreciating, foreign holding should increase too,” said Eduardo Suarez, an analyst at RBC Capital Markets in Toronto. Again, this points to property value increases in the future. “Annual inflation in Mexico was 3.36 percent last month, near a five-year low set in March. The central bank last week maintained its 2011 inflation forecast of 3 percent to 4 percent. In Brazil, Latin America's biggest economy, inflation quickened to 6.51 percent in April, breaching the upper limit of the government's target for the first time since 2005.”

Mexican President Felipe Calderon said in an interview on May 10 that he's "very comfortable" with the strength in the peso, which remains 4.5 percent cheaper than its average over the past decade. The peso has gained 12.6 percent in the past two years, the biggest since 1993. Mexico has a very transparent monetary policy, and they have been very clear and open that they don't plan to place restrictions on the currency," said Sergio Mendez, who helps manage about 80.5 billion pesos in assets as chief investment officer at pension fund Afore XXI. "Mexico has become very attractive for foreign investors."

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