Sep 16, 2011, 9:30 PM
Post #8 of 10
In addition to David's good points:
All of this drives down the confidence that the Mexican peso and Mexican economy will be strong in the near future, relative to the US Dollar strength.
- US/NYMEX Oil futures and spot prices fell from $100-$110 down to between $80-$90 per barrel of light sweet crude in August, driving future Mexican oil revenue expectations lower.
- France & Germany's changes (increases or decreases) in economic outputs (GDP) fell to roughly 0% in August's 2011 2'nd quarter reports, projecting flattened or lower demand for oil.
- Greece and Greeks have refused to make substantive effective financial reforms and have basically refused to take sufficient austerity measures to halt their slide.
- Recent reputable reports (especially this week) are saying that it is very likely that the Greek Government will soon default on all debts, bond repayments, and other financial obligations, unless the Germans bail them out again.
- German Bankers have been hinting this week that it would be cheaper to allow Greece to go bankrupt & default on all obligations, than it would cost for Germany and France to continue to throw new money at the Greek's self-inflicted downward spiral.
- If Greece defaults on all her financial obligations, it will leave key French banks holding-the-bag on huge amounts of debt - severely threatening the health of the French banking system and seriously damaging the already weak French economy (currently reported at 0% GDP growth).
- As the Greek mess spirals downward, it drags down the Euro, and drags down the future ability of European economies to use oil - driving oil prices lower - putting more pressure on the MXN Peso.
- If Greece defaults, the resulting waves may harm or even swamp shaky recoveries in Spain and Italy - and Euro-Bankers are saying lately they could not handle significant future downturns in Spain and Italy (because Greek bailouts have drained Euro reserves) - potentially threatening all of the Euro-zone economies - and suppressing current perceived Euro values - which again leverages against higher future oil prices.
- The Japanese economy has also had significant reported weakness since their earthquake disaster, further reducing current and future predicted demand for oil, also suppressing oil prices - which again suppresses MXN Peso strength relative to the US dollar.
This is not meant to be a thorough treatise on the USD/Peso exchange rate, but just a simple listing off-the-top-of-my-head of financial reports I've heard over the past 2 months. (The recent spate of US headline reports of especially horrific Narco-Traficante violence may also be playing a role in affecting the perceived stability of the MXN peso v. the USD???)
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(This post was edited by YucaLandia on Sep 16, 2011, 10:11 PM)