Mexico's Central Bank Leaves Interest Rate Unchanged at 3%

laht.com

MEXICO CITY – The Mexico Central Bank left the overnight rate unchanged at 3.0% in Thursday’s policy meeting, matching market expectations.

The closing paragraph from the statement was almost identical to the one from the 26 March statement. The bank wrote that it will remain watchful of all determinants of inflation and of medium- and long-term inflation expectations, but particularly the relative monetary policy stance (Mexico-United States) and the performance of the exchange rate trend.

One subtle change relative to March was that in March the bank wrote it would watch the performance of the exchange rate, and not of its trend. Analysts believe that this may be an attempt to signal that the currency trend is more important than outright levels.

The central bank sounded less upbeat about global growth than in March. In this week's report, it wrote that weakness has become more generalized across countries and regions. In March, it had written that the drop in oil prices could result in a net positive for global growth.

On the US Fed, the central bank wrote that there is now a stronger perception that liftoff will take even longer than previously anticipated. The bank argued that the drop in volatility in some international financial markets since 26 March was in response to the expectations of a later liftoff date by the US Fed.

On the domestic front, the bank upgraded somewhat its assessment of the state of the economy. In March, it wrote that economic activity had had a somewhat weak performance. This week, it wrote that economic activity continued to show moderate growth. Similarly, in March it wrote that consumption indicators had shown “little vigor.” In its latest statement, it wrote that “some consumption indicators seem to be showing some recovery.”

In March, the bank wrote that the balance of risks to growth had worsened; this week, it wrote that the balance of risks is still biased to the downside, but it did not worsen relative to late March.

Finally, on the inflation front, the bank’s assessment was almost identical to the one from the March policy statement. Specifically, the bank continues to project annual headline inflation to be “near” 3.0% in upcoming months and that it will close the year below this level. Meanwhile, the bank projects annual core inflation to be below 3.0% throughout 2015. For next year, it projects annual headline and core inflation to be “near” 3.0%. The bank reiterated that pass-through from peso weakness has been in line with expectations, impacting mainly durable goods, and without second-round effects.

"Barring a major depreciation of the peso in the next five weeks, we think that the central bank will leave the overnight rate unchanged at 3.0% in the next monetary policy meeting on 4 June," writes Alonso Cervera of Credit Suisse. "For now, the exchange rate continues to be the key variable that will likely determine the timing and extent of interest rate hikes in the remainder of 2015. We think that next year, the expected rise in inflation, and likely higher interest rates in the US will be particularly important."

US Dollar, as strong as it gets in Mexico

theyucatantimes.com

As a consequence of the Chinese economic decline in the last months, the Dollar is trading at an incredible $15.55 pesos, 5 cents more than last week.

According to the Mexican Central Bank, the strength of the Dollar in the last months is due to the notorious decrease of exports from China during March. This increase in the selling point of the Dollar is beneficial for the touristic sector specially in the state of Quintana Roo. But it also has its drawbacks to the National economy, taking about Mexican enterprises conducting businesses in US dollars with multinational companies in foreign markets.



These are good news for Expats living in Mexico though, because the monetary exchange rate is likely to go up.

So if you´re thinking about buying properties or investing in some sector, now is a good time to take advantage of the situation.

Current Exchange Rates:

Bank	Buying	Selling
Banamex Dollar	14.95 pesos	15.55 pesos
Banamex Euro	15.95 pesos	16.34 pesos
Bancomer Dollar	14.67 pesos	15.49 pesos
Bancomer Euro	15.74 pesos	16.41 pesos

Source: http://yucatan.com.mx/economia

Frostbitten US Fliers Chase Sun, Cheap Pesos in Mexico

banderasnews.com

Nacha Cattan - Bloomberg.com
go to original
March 13, 2015

Aeromexico's international passenger traffic rose 13% in February. The carrier flies direct from New York to Cancun and offers flights from Boston and Chicago to Cancun, Cabo San Lucas and Puerto Vallarta.

Mexico City - A frigid U.S. winter is creating a record tourism season in Mexico as travelers enriched by savings from cheap gas and stronger dollars seek warmer climes.

Among the top beneficiaries of the winter migration are airlines Volaris and Grupo Aeromexico SAB, the first and fifth best stock performers respectively among more than 100 large companies trading in Mexico as of March 6. Airport operators listed on the IPC stock index are also beating that gauge in 2015.
This season is shaping up to be the most robust for Mexico tourism, the country's fourth-largest source of foreign cash and a bright spot in an economy dragged down by low oil prices and production. December revenue from tourists was the highest for any Christmas season, according to central bank data, and foreign visits in January rose from last year's highs with a boost from U.S. travelers.
"I'm looking forward to not putting on 12 layers before I go outside," said Morgan Thompson, a marketing and communications manager at a furniture company in New York, who recently booked an Aeromexico flight to a Mexico beach town. "I've never seen so much snow in my life."

Last month was the coldest February on record at New York's John F. Kennedy International Airport, and Chicago tied its coldest February ever, the National Weather Service said. Boston had its sixth-snowiest January, followed by its snowiest and second-coldest February.

Southern Exodus

The weather triggered an exodus south. In January, foreign visits to Mexico rose 8.9 percent from a year earlier, according to the National Immigration Institute in Mexico City. It was the biggest month for international visitors of any January since 2007, according to the Interior Ministry. Travel from the U.S. alone increased 11 percent in the same month.

"The weather in the north has been more extreme than in the past years," said Jose Maria Flores, an analyst at Casa de Bolsa Ve Por Mas SA in Mexico City. "That propels people to travel more during this time of year and they're inclined to seek out the heat of Mexico's beaches."

A weakening peso is also an incentive for crossing the border. The peso fell to a record Tuesday amid speculation that U.S. interest rates will increase by September.

Volaris, whose only foreign flights are to and from the U.S., saw international traffic rise 18 percent in February, more than the 17 percent it grew a year earlier.

Aeromexico's international passenger traffic rose 13 percent in February. The carrier flies direct from New York to Cancun and offers flights from Boston and Chicago to Cancun, Cabo San Lucas and Puerto Vallarta. Volaris flies from Chicago and Portland to Cancun and Mexico City.

Makes Sense
"Of course" the severe winter is helping attract tourists, Aeromexico Chief Executive Officer Andres Conesa said in an interview last week. And with the peso's 13 percent decline since November to near 15 per dollar "it makes more sense to travel to Mexico."
Volaris has risen 27 percent this year and Aeromexico gained 21 percent. The Mexican benchmark IPC index is virtually unchanged in that period. Volaris CEO Enrique Beltranena said it was difficult to determine if weather was helping the airline.

Seeking Sun

In February, passenger traffic from abroad rose more than 10 percent at Grupo Aeroportuario del Centro Norte and Grupo Aeroportuario del Sureste, which serve resort destinations including Acapulco and Cancun. Grupo Aeroportuario del Pacifico, which serves Pacific beach destinations, reported international traffic rose 6% in January, the latest period for which statistics are available.

None of the airport operators returned requests for comment. According to its website, Aeroportuario del Sureste had the highest international traffic in both January and February that those months have ever recorded since 2000.

"Weather in the U.S. could be a relevant factor that along with the strength of the dollar is making Mexico a more attractive tourist destination," said Javier Romo, an analyst at Signum Research, who has a hold recommendation on Aeromexico.

Plunging oil prices may also help frozen northerners pay for their escape from the cold. Crude prices have fallen about 50 percent since June, reducing costs at the gas pump & for some fares.

"I missed two weeks of hell and now I'm back again," Alex Nunez, an artist from Manhattan, said in a telephone interview after her recent trip to Mexico City. "I was planning on going to a wedding and wasn't sure. Then the price dropped so much that I had to get the ticket, and the weather really helped" clinch the decision.

March Snow

Severe weather is usually more of a hindrance to travel than a help: Blizzards have delayed thousands of flights across the U.S. the past two winters. Some travelers are avoiding travel to northern cities now, Aeromexico's Conesa said.

That hasn't stopped bookings to Mexico as winter weather lingers into March, Emma Jupp, president of Liberty Travel, based in Ramsey, New Jersey, said by e-mail. Bookings have risen 14 percent so far this year compared with the same time in 2014, she said.

"With the back-to-back storms, there has been an uptick in both inquiries and bookings to warm weather destinations, namely the Caribbean and Mexico," Jupp said, referring to three storms that slammed the New York City area in four days last week. "There is a consensus that it's time to trade snow boots for sandals."

Original article

Peso to Stabilize Against Dollar

by Murry Page

9 Dec 14  

mazmessenger.com

 

Yesterday the Bank of México (Banxico), the country’s central bank, revived an intervention program designed to curb foreign-exchange volatility after the peso fell to a two-year low.

Banxico said in a statement it will offer $200 million a day at an auction that would be triggered whenever the value of the peso drops more than 1.5 percent from the previous session’s fix rate.

The Mexican peso has been steadily losing value against the dollar, but after the announcement it reversed its losses to gain slightly and then trade about flat.

In an interview the Central Bank Governor Agustin Carstens implied that the bank may have to raise interest rates if the currency slump affects consumer prices.

Carstens said that so far this morning parity stood at 14.36 pesos per dollar, against 14.46 pesos yesterday, “the exchange rate has stabilized,” he said.

(from Milenio)