Mexico is closing its fourth consecutive week of a rising peso rate compared to the dollar. It advanced 0.9 percent this week to a rate of 12.2323 per dollar from 12.34 (which was the previous rate on December 31st). This marks the longest streak in rising peso values since October 2010.
“The peso has been responding all week to the economic data coming out of the U.S.,” said Rafael Camarena,an Banco Satander SA economist based in Mexico City,“The data is creating positive expectations about growth in the U.S.”
The figures he is referring to come directly from two types of U.S. Factories. The long beleaguered U.S. Auto industry saw increased sales for the first time since 2005. In addition,orders at U.S. factories unexpectedly rose in November of 2010. The unemployment rate in the United States has also dropped to its lowest level since mid-2009. All of these factors lead to a stronger position for the peso since the U.S. purchases 80% of all exports from Mexico,as reported by Bloomberg.
The peso is one of sixteen currencies that is tracked consistently by Bloomberg. During 2010,Bloomberg noted that the peso rallied 6.1 percent. This represented the largest percentage rise since 1993. Consumer prices in Mexico increased slightly more than expected during December,showing a growing interest in domestic spending. Annual inflation for the peso is expected to be between 3.75 percent and 4.25 percent in the first quarter of the year. That rate should taper off as 2011 continues,according to the Central Bank.
Bloomberg also reported that consumer confidence in Mexico jumped from 88.5 to 91.2 in December. This number shows what native Mexicans think of the economy,the financial situation of the national and whether they will be purchasing durable good. The jump in just a few weeks shows indications that the population of Mexico is confident about their economy as well.
All in all,the Mexican economy grew by 5.1 percent last year and this year it is expected to grow another 6.1 percent,partially due to positive figures coming from the United States. With consumer confidence up and the peso growing in value,2011 is off to a terrific start for the Mexican economy.