Mexican Peso Jitters
The recent volatility of the peso has put Mexico's Central Bank on yellow alert just weeks before the July 2 presidential vote. Guillermo Ortiz, president of the Banco de Mexico, says he is ready to clamp down on the money supply if necessary to chill an economy that shows signs of overheating. But he says some discipline on the fiscal side is needed as well. Mexico's economy expanded at an annual rate of 7.9% in the first quarter. Some analysts are concerned because public spending increased nearly 64% in the first quarter, the largest quarterly increase registered since President Ernesto Zedillo took office in December, 1994.
Analysts think the government may be front-loading this year's budgeted spending to help Zedillo's Institutional Revolutionary Party (PRI) win the election. Opposition candidate Vicente Fox is running neck-and-neck with PRI candidate Francisco Labastida.