Mexico Inflation Increases In Early July

Via Reuters:

Today Mexico's statistics agency said that consumer prices rose 3.53 percent in the year through July 15. "Prices climbed 0.32 percent in the two-week period MXCPIF=ECI, faster than the 0.24 percent reading expected in a Reuters poll."

Inflation remains close to the central bank's 3 percent inflation target. Policymakers say they can live with variations of up to a percentage point higher or lower.

Mexico's Largest Fishery Passes Sustainability Assessment

The Pacific sardine (Sardinops sagax) fishery in the Gulf of California, has been certified as meeting the MSC standard for sustainable, well-managed fisheries. After following an independent assessment.

“The certification is important because it sends a clear message that it is possible to fish in a responsible way in accordance to the FAO fishing code, by being certified we are committed to fish in a responsible, sustainable and environmentally friendly way. [...]"

Click here to read more on the subject and what this could mean for the industry in Mexico.

Spain's BBVA to Invest $2 Billion in Mexico

Via Latin American Herald Tribune:

Spanish banking giant BBVA, the second largest bank conglomerate in Spain, and 7th in the world, will invest $2 billion in its Mexican unit, BBVA Bancomer, over the next three years, BBVA chairman and CEO Francisco Gonzalez said in June.

“

This plan entails strong investment in technology and new platforms, and it is also an indication of BBVA Bancomer’s commitment to banking and the promotion of lending,” Gonzalez said in an address that was attended by Mexican President Felipe Calderon.

With the ever-growing Mexican economy, the BBVA investment funds will be used to expand branches, add ATMs and payment terminals, and promote mobile banking, Gonzalez said.

How do you think this will affect the Mexican banking sector and the Mexican economy as a whole?
I'd be interested to read your comments below.

Lesson in Mexico's Monetary Policy: Part 4

The central bank is authorised to auction its reserves of US dollars if the peso depreciates by 2% or more against the previous day's close. In this way, the central bank can increase liquidity in the market and smooth volatility in the value of the currency.

In 2009 the central bank put in place a programme of interest-rate swaps for up to Ps50bn (US$3.7bn) to facilitate banks' liability management, enabling them to swap exposure to long-term fixed-rate instruments for short-term variable paper.

In January 2011 the IMF renewed Mexico's precautionary, two-year US$72bn flexible credit line (FCL). The FCL insures against possible volatility in global markets by supporting the country's balance of payments and international reserve position.

Source: Economist Intelligence Unit

Lesson in Mexico's Monetary Policy: Part 3

The central bank, Banco de Mexico (Banxico), is the autonomous authority on monetary policy. The central bank has the primary objective of maintaining stability in the purchasing power of the peso. The value of the peso is determined by the market, under a floating exchange-rate regime in place since the December 1994 peso devaluation. However, the central bank does intervene in foreign-exchange markets to maintain currency stability. The Exchange Rate Commission sets policy; it is made up of six members -- three each from the Ministry of Finance and Public Credit (Secretaria de Hacienda y Credito Publico -- SHCP) and the central bank, with the SHCP holding the deciding vote.

In January 2008 Banxico formally adopted an operating target for the overnight interbank rate (tasa de fondeo bancario) as a means to control peso liquidity in the market. The overnight interbank rate is set by the central bank's board of governors at its policy meetings. In 2009 Banxico engaged in a cycle of aggressive monetary easing to ease credit conditions and stimulate the slowing economy during the international financial crisis. The interbank rate was cut by 375 basis points in the first half of 2009, from 8.25% in January to 4.5% in July, where it remained as of end-March 2011. The Economist Intelligence Unit expects Banxico to maintain the interbank rate at this level throughout 2011.

Lesson in Mexico's Monetary Policy: Part 1

Banco de Mexico (the central bank -- Banxico) is the autonomous authority on monetary policy. The central bank has the primary objective of maintaining stability in the purchasing power of the peso. The value of the peso is determined by the market through a floating exchange-rate regime.

The central bank monitors price levels, and the economic variables that influence prices, in determining monetary policy. It also monitors the exchange rate, differences between observed and projected inflation, inflation expectations, revisions on collective employment contracts, producer prices, and the balances of the current and capital accounts.

Lesson in Financial Regulation in Mexico: Part 1

Financial regulation has been extensively reformed and improved in the past decade under the auspices of Banco de Mexico (Banxico -- the central bank), the Ministry of Finance and Public Credit (Secretaria de Hacienda y Credito Publico -- SHCP) and the National Banking and Securities Commission (Comision Nacional Bancaria y de Valores -- CNBV). Some of the more important steps in creating a solid regulatory framework have included the creation of a limited deposit-insurance fund; the introduction of new capital-adequacy and provisioning requirements; accounting standards that are revised regularly to match US practices; and the implementation of stricter lending practice requirements aimed at better assessment of the reserves needed to cover losses.
In 2010 Banxico focused on aiding Mexico's recovery from the global financial crisis, while also preventing the domestic economy from slipping back into recession. At the height of the crisis, Banxico engaged in a cycle of monetary easing and took a series of policy measures to ease credit conditions, stimulate the economy and counter pressure on the peso. The interbank rate was cut by 375 basis points in the first half of 2009, from 8.25% in January to 4.5% in July, where it remained as of end-March 2011.
In July 2010 Banxico published new norms regulating charges and fees financial institutions are permitted to impose on their clients (Banco de Mexico Circular 22/2010). The new rules prohibit credit-granting institutions from charging fees for services such as the opening and closing of on-demand savings accounts, and the cancelling of credit cards. Fees for overdrafts are only permitted if and when the institution's client has agreed to such a charge through a separate signed consent form. The reforms became effective at the start of 2011.