The Bank of Mexico announced this January that the nation’s foreign reserves rose by more than $13 billion in 2013, totaling $176.52 billion at year’s end. Foreign reserves mostly include gold and currency that is held by Mexico’s central bank, along with a variety of exchange that results from borrowing.
“This was the 21st week with record reserves since the end of 2012, when Mexico’s foreign reserves totaled $163.51 billion,” writes the Global Post.
According to monetary officials, the rise in foreign reserves was positively impacted in part by the sale of new dollars by Petroleos Mexicanos (Pemex) to the central bank in a transaction that totaled more than $2 billion. Throughout 2013, foreign reserves in Mexico increased by $13.03 billion, and the nation’s money supply increased by more than $3.36 billion.
But the numbers so far in the beginning of 2014 are perhaps even more important than what happened in the past. In farther support of Mexico’s booming economy, foreign reserves have already grown by an impressive $7 million last week alone, bringing the new total up to $176.59 billion as of early January.
According to the World Bank,Mexico is the second largest economy in Latin America and could easily surpass Brazil in the very near future to assume the region’s number one position. In addition to the rise in foreign reserves,Mexico has experienced a massive influx of capital flows in recent years and is in a “sound position to deal with moderation of flows upon withdrawal of monetary support in the U.S.” should that scenario ever happen to occur.
“A flexible exchange rate, a modest current account deficit, international reserves at [more than] $170 billion and an IMF FCL of $73 billion should provide significant protection against external shocks,” writes the World Bank. “The adoption of structural reforms in the areas of labor legislation, education, telecommunication and competition policy, financial sector, energy and tax policy, is expected to enhance potential output growth, currently estimated around 3 percent, by about a full percentage point through additional investments and eventually through higher levels of productivity that these reforms are expected to unleash.”