Economics
Go Ahead, Sell the Peso, Mexico Doesn't Care What You Do Anymore
- Inflation has fallen to a record low despite the peso's tumble
- `We had to see it to believe it,' says Credit Suisse economist
Why Are Hedge Funds Shorting the Mexican Peso?
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By most traditional economic gauges, little is going right today for Mexico. Growth is sluggish, oil exports are falling and credit markets have started to dry up.
Yet beneath the surface, a surprising and little-understood transformation is ushering in one of the country’s most important developments in years: the peso’s age-old link with inflation has been broken. No longer does a plunge in its value trigger an automatic surge in consumer prices. In fact, the most recent data suggest that it causes almost no inflation at all.