Let no one get President López Obrador into his head that now the peso must be defended against the dollar just because the Mexican currency has depreciated more than 4% in just ten days.
Because it is clear that in the National Palace they like to buy little mirrors, like that initiative of a senator from Morena to nationalize the already nationalized lithium that López Obrador turned into a fast track law after the failure of his electrical counter-reform.
With Q4 turning the parity of the Mexican currency against the US dollar into a supposed measure of its success, it must be difficult to see how the peso is losing so quickly in the markets.
That is why it is urgent that they explain to the President how the peso is depreciating in part because next week the United States Federal Reserve (Fed) is about to decide on an increase of 50 basis points in its interbank rate.
And, no, it will not be Joe Biden who announces the increase in the rate in the United States to 1 percent the following Wednesday. There, where autonomies are respected, this news will be communicated by the Fed on May 4 at one in the afternoon, Central Mexico time (unless, of course, Mexican populists come up with the idea of repealing summer time before ).
Perhaps it is necessary to be aware of the morning of May 12 to know if the Governing Board of the Bank of Mexico also decides to raise its interest rate.
The volatility in the markets is maintained by the increasingly aggressive reaction of Russia against Ukraine and the West. But, above all, when the high inflation that we are experiencing is accompanied by bad data on the performance of the economy at the start of this 2022.
This morning we have knowledge of the preliminary data of the Gross Domestic Product (GDP) of Mexico that will surely tense the spirits among the market participants.
But the foretaste of the bad start to the year came from the United States with that first reading of its GDP at the end of last quarter and the annualized drop of 1.4 percent. It is the largest economy in the world and it is the country on which Mexico depends.
That drop, unexpected in that dimension, is seen as a simple blip on the road to a robust recovery. That is considered a temporary low. Not so the high inflation that shows signs of greater permanence in the US economy.
So a slump in growth and persistent inflation leave no doubt that the Fed will be more aggressive in speeding up rate hikes and being more forceful in its announcements.
The Mexican economy is something else. A negative result, like the one we are surely discussing this morning, adds to a weak economy that does not have enough engines, in which there is a lot of distrust, so that an accelerated recovery to pre-pandemic levels can be thought of.
This casts more doubt on Banxico’s future reaction speed with its interest rates, in a country where the President believes that he should also be in charge of combating inflation.
Televisa News Anchor
The great Depression
Bachelor of Communication Sciences from the National Autonomous University of Mexico, with a specialty in finance from the Autonomous Technological Institute of Mexico and a master’s degree in Journalism from the Anahuac University.
His professional career has been dedicated to different media. He is currently a columnist for the newspaper El Economista and news anchor on Televisa. He is the owner of the 2 pm news space on Foro TV.
He is a specialist in economic-financial issues with more than 25 years of experience as a commentator and host on radio and television. He has been part of companies such as Radio Programas de México, where he participated in VIP business radio. He was also part of the management and talent team of Radio Formula.