The holding of government securities in the hands of foreign investors accumulated its fifth quarter with outflows, however, the flight slows down, favored by the increase in interest rates of the Bank of Mexico (Banxico).
The first quarter of 2022 registered an outflow of 0.74% or 12,088 million pesos, reporting a total of 1.62 billion pesos in the hands of foreign investors. The latest data published by Banxico is 1.626 billion pesos on April 6, an increase of 0.33% so far this month.
In previous quarters, the capital outflow was 2.21% in December, 4.92% in September, 1.55% in June and 5.63% in March 2021.
After touching a minimum of 1,592 billion pesos on November 29, 2021, foreign investments have increased 33,722.8 million pesos or 2.12% until April 6.
The Vice President of Investments at the fund manager, Franklin Templeton, Luis Gonzali, commented that “between January and February there was capital inflow, but in March they left, in response to the war between Russia and Ukraine. Despite this, we continue with similar numbers at the end of 2021, and the same period last year there were more drastic outflows of capital, it seems that investors are already staying in Mexico.
The analyst added that “Banxico’s rate hike has made government debt more attractive, and having a high rate compared to the United States benefits capital flows remaining stable and even capital inflows.”
Banxico currently registers an interest rate of 6.50% while the United States Federal Reserve places it in a range of 0.25 to 0.50%, added to the fact that the inflation rate in the North American country is higher than in Mexico for the third consecutive month.
Janneth Quiroz, deputy director of Economic Analysis at Monex, explained that “the movements in the increase in the reference interest rate that Banxico has had, going from 4 to 6.5%, showing a greater appetite in Cetes, short-term instruments, reflecting interest of investors for this instrument.
He said that “in the last three months, inflation in the United States has been much higher than that of Mexico, and that in real terms, the interest rate of that country is more negative than the national one.”
The expert mentioned that “investors are betting that the Bank of Mexico maintains this upward cycle of interest rates”
The Franklin Templeton specialist mentioned that no changes in confidence in Mexico are anticipated, “although it will remain depressed, but the levels of confidence of investors regarding their position in the country will be maintained.”
Janneth Quiroz concluded by saying that she hopes “the stability in the holding of government securities in the hands of foreigners will continue, in fact, since October it has remained at these levels, and although the global economy still presents many risks, investors will continue to act cautiously. especially considering that Mexico is an emerging economy”.