Mexico’s peso- to become a major trade currency

By Adina Moloman

Source: El Economista

In a contest where the economies of many emerging markets are slowing, Mexico’s economy is moving forward. China and other emerging-market economies appear to register a slow down just as the developed economies of the United States and Europe finally show signs of renewed strength nearly six years after the 2008 Recession. IndustriesManufacturing in Mexico has benefited from the pick-up in US economy.

Mexico’s peso advanced, so Moody’s Investors Service raised the nation’s credit rating to the highest ever-in 2014.

Mexico’s peso is becoming an international currency, since trade is an important factor in establishing a currency as an international currency; given the fact that Mexico Maquiladora Sector is export oriented and the country has signed around 50 free trade agreements with different countries and regions around the world.

According to a report led by Augusto de la Torre, Regional Chief Economist for the World Bank, the Mexican peso is the eighth-most traded currency in terms of turnover and is gaining the status as a reserve currency.

Given the fact that the Mexican currency is used for international trade and foreign direct investment transactions (many new manufacturing investments are for 2014) are helpful in achieving the international investment and reserve currency status.

The Mexico peso is well appreciated for the moment because of the ongoing reform process in the country, especially on energy and telecommunications, and the implications this has for stronger foreign direct investment and other inflows into Mexico, as well as the impact on potential locally growth.

There is no doubt that there is still a current dominance of the US dollar and the euro in the invoicing of international trade but it is estimating in the medium-to-long term the Mexican peso will become a major currency of settlement in international trade.