Following announcements from a variety of major auto manufacturers,including GM,Nissan and Ford,Mexico’s peso is experiencing a rally,according to Bloomberg News. The investments will total at least $5.3 billion in foreign direct investment,which has been one of the major catalysts behind the peso’s 4 percent gain on the dollar this year.
This gain is the most out of all of the world’s major currencies and is also improving bond returns for investors,a win-win for Mexico’s growing stature as a major player on the international scene. According to the Bank of America indices,this means that the peso-dominated debt offered by the Mexican government has gained more than 15 percent this year.
Foreign direct investment is expected to hit at least $22.8 billion in 2012,which is the largest gain since 2008. Furthermore,according to Mexico’s Economy Ministry,the $5.3 billion coming in from auto manufacturers represents the largest amount since 2007. The close proximity of Mexico real estate to the U.S.,along with the country’s affordable manufacturing costs,has helped to attract foreign investment dollars from international corporations in recent months and years.
“What’s happening in the auto industry is definitely positive for the currency,” strategist Benito Berber of Nomura Holdings told Bloomberg. “It’s part of the reason why real money is so bullish on Mexican peso bonds.”
Nissan announced just this January that it will invest at least $2 billion to build a new factory in Mexico – it’s third in the country. Construction commenced in early July and the new plant is expected to help the auto giant reach its goal of producing at least 1 million vehicles every year in Mexico.
“Mexico has a strategic position,” Nissan director of corporate communications for Mexico and Latin America told Bloomberg in Mexico City. “It’s a country that has a significant export platform.”