Word: peso
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...this kind of populist blast--a picture painted by Limbaughs and cartoonists across the U.S. of a President extending a hand to Wall Street and ailing foreign countries--that convinced Clinton he had to bypass Congress altogether. With the Mexican peso sliding, only $3.5 billion left in Mexican currency reserves and financial markets throughout Latin America on the brink of collapse, the President last week invoked his executive authority to grant Mexico $20 billion in loans and loan guarantees as the centerpiece of a coordinated bailout. Following Washington's lead, the International Monetary Fund agreed to provide Mexico with...
...peso devaluation ``raised the premium for emerging markets,'' said Peter Churchouse, managing director of Morgan Stanley Asia Ltd. in Hong Kong. ``American investors in particular got into them in a wave of euphoria. A lot of the new investors were naive to the risks. What Mexico has done is to hit everyone over the head and say, `Look, there are risks...
...destabilization--as may Latin America as a whole. Already the uncertainty about Washington's course of action is accelerating the Mexican economy's downturn. Some 4,000 businesses closed in the first four weeks of 1995 because of high interest rates, lack of sales and tight credit since the peso crash. Predictions of the annual inflation rate for 1995 run to 20% or more, and many economists expect the economy to shrink at least 2%, even if the U.S. guarantee is approved. Government and private analysts contend that while direct foreign investment will fall only slightly below last year...
...midweek, Mexico got a measure of relief when the International Monetary Fund approved a $7.8 billion loan, the largest it has ever made, to help stabilize the peso. Argentina, Brazil, Chile and Colombia also jointly opened a $1 billion credit line for Mexico. But the infusions were not large enough to solve Mexico's most serious challenge: finding sufficient funds to pay off or refinance $26 billion in mostly foreign-owned short-term bonds maturing during 1995. The government got a hint of the difficulties ahead last week when it put at auction $400 million in U.S. dollar-denominated bonds...
...prosperity will have to do with less as a result of the cooling of investor ardor. Argentina, which like Mexico has an overvalued currency and carries substantial foreign debt, has watched $1.8 billion flee the country since the Mexican devaluation, despite firm promises by the government that the Argentine peso will not be devalued. Last year $11 billion flowed into Argentina in direct and indirect investment; this year the amount is expected to drop by as much as half. ``There is a crisis of confidence and some fears that Argentina might have trouble paying its debt,'' says Pablo Gerchunoff...