Mexico for the long-term

Posted by Scriptaty | 8:28 PM

Amid the convergence between the U.S. and Mexico, global investors have shown comfort investing in Mexico for the longer-term. Bernal points toaction in the Mexican longterm bond market as evidence.

“Eighty percent of the Mexican long-end bonds maturing in 2023 are owned by foreigners,” he says.

“Mexico has benefited from trade with the U.S. and Canada,” Coutino says. “In 2004, Mexico saw its highest growth rate in 10 years at a 4.4 percent GDP rate.”

However, with approximately 90 percent of Mexican exports headed to the U.S., a slowdown in the States could slow the growth pace in Mexico as well.

Looking ahead, the Mexican peso (MXN) could price in some political uncertainty ahead of the next presidential election there in 2006. The peso was trading at about 10.98 vs. the U.S. dollar at the end of May, and Coutino saw room for the USD/MXN rate to move toward 12.00.