After a year of reactionary fluctuations that began to steady in the later part of 2017, Mexico’s inflation rate appears poised for a stable decrease heading into 2018, barring any setbacks to the peso’s exchange rate. Pablo Soria de Lachica, internationally recognized broker, discusses the country’s long term inflation outlook, expressing cautious optimism moving forward after an eventful 12 month period that witnessed the nation’s currency hitting a 16-year high in September.
Mexico’s inflation rate averaged 25.19 percent from 1974 until 2017, peaking at 179.73 percent in February of 1988, with an all-time low of 2.13 percent in December of 2015. Likewise, the beginning of 2017 was somewhat tumultuous for the peso, evidenced by a record low against the U.S. dollar during early January, when it dwindled to 22.0 MXN/USD. This was attributed to widespread pessimism towards the future of the North American Free Trade Agreement (NAFTA) following the 2016 United States presidential election. These fears were eventually tempered, as sentiments were eased amidst hope of a restructured plan that would be to the benefit of Mexico’s current trade deals. Official talks between the U.S., Canada, and Mexico to revamp NAFTA are now expected to linger into 2018, exceeding the assumed December deadline.
Some financial experts voiced concerns that these ongoing renegotiations could lead to an increased level of protectionism in the United States, which then caused the Mexican peso to underperform in the months following September’s historic surge that had not been equaled since 2001. However, the currency is expected to keep a healthy distance from the all-time low reached in January, regardless of how any new economic agreements turn out. Pablo Soria de Lachica points out Mexico’s newly chosen central bank chief Alejandro Diaz de Leon has indicated that inflation should move gradually towards a 3 percent target in 2018 — if the peso does not experience any big losses during the period. Any negative repercussions from an unfavorable NAFTA decision are likely to be tempered by a raise in interest rates. “This last year has been complicated by various shocks that have affected the Mexican economy, which have been reflected by an increase in inflation,” Diaz de Leon said during a November interview with Reuters. “We have taken several monetary measures to induce a reduction back to target. One cannot assume that the disinflationary path will necessarily go as expected.”
Pablo Soria de Lachica is a world renown broker and foreign exchange expert. An MBA graduate of Universidad Tecnológico de México, Pablo presently collaborates with Kartoshka, a world leader in the creation of technology for sales, telemarketing and customer support. He also develops integrated online trading tools for investors, conducts market analysis, and oversees the day-to-day financial operations for several prominent companies located abroad. A devoted philanthropist, his community support includes active involvement in local Boy Scouts and Delta Epsilon Sigma programs, along with generous contributions to organizations such as the America-Israel Cultural Foundation, and Bridges for Peace.
Pablo Soria de Lachica Highlights Investment Opportunities Created by Mexican Market Liberalization: https://finance.yahoo.com/news/pablo-soria-lachica-highlights-investment-163000542.html