BizJournals Portfolio
Home >   Business Views, Opinions and Blogs >   Business Blogs >   Market Movers >  

Why Did Mexicos Peso Fall Today

Market Movers

by Yves Smith and Felix Salmon
Main
Illegal immigrants are good for the US economy   Anything PE shops can do, pension funds can do better

Recent Blog Posts

Links

Apr 10 2007 12:00am EDT

Why did Mexico's peso fall today?

It's not often that currency moves have an obvious explanation. But every so often, you can apply the laws of supply and demand to FX. For instance, when Citigroup announced that it was buying Mexico's Banamex for $12 billion, the Mexican peso rose because of all the money expected to flow into the country. Today, the flows are the other way around: Mexico's Cemex is buying Rinker, which is mainly based in the US, for $15 billion. So one would expect the peso to fall.

Or, you know, you could just blame the housing market:

April 10 (Bloomberg) -- Mexico's peso fell the most since March 13 on concerns a housing-led slump in the U.S. will curtail dollar flows.
Subprime mortgage defaults may temper U.S. economic expansion, a Bloomberg survey of economists today showed. The U.S. buys about 80 percent of Mexican exports.

Now, I'm not saying that the peso fell because Cemex is buying Rinker. I think all such attempts at causal reasoning are silly, and in any case we know very little about how much of the acquisition price is going to come out of Mexico. But I am saying that if you're going to insist on some kind of reason for the fall in the peso, the Rinker announcement has to be much more compelling than a bunch of old news about the US housing market.

. □

blog comments powered by Disqus
Real Business, Real Results
Out of the 'Family'

Did anyone at Microsoft ever watch the (gasp!) offensively funny show Family Guy?

Cruz Missile Lands

Ex-Morgan Stanley exec Zoe Cruz is now heading her own hedge fund. Are Wall Street's leaders done?

Scandal Chic

Martha, Bernie and Skilling know that what you wear for court can go a long way in public perception.

spotlight on

Health Care

Bad to the Bone No More

Companies such as General Mills say they're stepping up efforts to change employees' bad behavior and promote healthier lifestyles. Read More