Word: pesos
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Dates: during 1980-1989
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...just as suddenly as the financial picture turned sunny, it has clouded over again. Last week the Mexican peso began to gyrate wildly. By Friday its value had settled to about 2,700 pesos to a dollar, down 37% for the week. Supplies of dollars quickly ran out as Mexican citizens lined up at banks to change their pesos. At week's end Mexico's Finance Minister, Gustavo Petricioli, appealed to the public on national television to remain calm...
...plunged by more than 70%, from $38 billion to $11 billion. Says Salvador Kalifa, an economic consultant from the northern city of Monterrey: "Gossip and rumors take precedence over all else. All people want is to get rid of their portfolios." The market collapse made Mexicans nervous about the peso...
...several weeks the government propped up its currency by using its reserves of dollars to buy pesos. By last week, however, Mexican officials began to fear that they would come close to running out of greenbacks. If that happened, Mexico would be unable to pay interest on its foreign loans and obtain new credit from banks. Result: the government abruptly abandoned its support of the peso, sending the currency into a free fall...
While a steady devaluation of the peso has boosted exports and helped build foreign reserves of $15 billion, the reforms have produced an annual inflation rate of 130%. Additional cutbacks in public spending are certain to further antagonize Mexico's powerful labor unions, which have grown angry as purchasing power has shrunk by as much as 40% during the past five years. Moreover, Mexico has a foreign debt of more than $100 billion that consumes about $1 billion a month in interest payments. Although a showdown with the labor unions may come, Salinas is expected to follow De la Madrid...
...assembly plants, then paid duty only on the value added abroad when the products were returned to the U.S. For nearly two decades, these exchanges fostered steady but unspectacular growth in border cities such as Juarez, Tijuana and Mexicali. But the trend accelerated dramatically in 1982, when the Mexican peso lost 82% of its value against the U.S. dollar. Mexican wages fell to irresistibly low levels for U.S. companies facing tough competition from Asia...