In 1994, the world saw the decline of the Mexican Peso, leading to what is now considered as the Mexican Peso Crisis. The crisis was characterized by the drastic decline in the value of the Mexican Peso. The Mexican Peso Crisis is considered significant because of its impact on other parts of the region, including Brazil. The following is a discussion of the causes and impact of the Mexican Peso Crisis.
The events/causes that led up to the devaluation of the peso
The Mexican Peso Crisis can be traced to the decision of then president Zedillo’s decision to reverse the government’s then policy that imposes tight controls on the Mexican Peso. This decision is considered by critics as an important factor that led to the Mexican Peso Crisis (Mathur, 17). It is important to note that the lifting of the tight controls on the Mexican Peso was intended to make some adjustments that would intentionally devaluate the Mexican Peso. However, the aim for the devaluation was just gradually in order to make the country competitive in the international business environment (Bhagwati, 8). The main factor that made the decision contribute to the Mexican Peso Crisis was that it was not properly handled as was necessary. The handling of the lifting of the currency controls was not effective at the political level or political aspect, such that the Mexican Peso experienced drastic and continued devaluation, which was opposite to the planned gradual and small devaluation of the currency. The result of the drastic decline of the Mexican Peso eventually resulted in the crisis (Mathur, 17).
The decision to lift the currency controls can also be traced to the pre-election decisions that were aimed to stimulate the Mexican economy in order to address th...
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...risis shows the importance of making policy changes with effective political handling in order to prevent such crisis from happening again.
Works Cited
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All walks of life are presented, from prevailing businessmen of white-collar status, to those of the working class and labor industry, as well as individuals who deal in the black market of smuggling illegal immigrants across the border into the U.S. Hellman’s work explores the subject of Mexico’s economic situation in the 1990s. NAFTA (North American Free Trade Agreement) closely tied the United States and Mexico during this period, as well as similar policies such as GATT (General Agreement on Tariffs and Trade) that were also created. These issues pertaining to economic policies between the two nations, Mexico and the United States are seen highlighted throughout her work.
Benitez, Gerardo, Latin American Perspectives: The Maquiladora Program Its Challenges Ahead, THE WHARTON JOURNAL, December 11, 1995.
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Mignolo, W. D. (2005). The Idea of Latin America (pp. 1-94). Malden, MA: Blackwell Publishing.
This paper argues that the Mexican peso crisis of December 20 should have been expected and foreseeable. In the year preceding the crisis, there were several indicators suggesting that the Mexican economy and peso were already under extreme pressure. The economy bubble was ballooning to burst so much so that it was simply a crisis waiting to happen.
Harry E. Canden. , & Gary Prevost, (2012). Politics Latin America. (4th ed.). New York: Oxford University Press.
Kehoe, Timothy J. (November 2010). Why Economic Reforms Have Not Generated Economic Growth in Mexico. Kim J. Ruhl Department of Economics, NYU Stern School of Business. Retrieved from http://www.kimjruhl.com/storage/data/KehoeRuhlJEL.pdf
Mignolo, W. D. (2005). The Idea of Latin America (pp. 1-94). Malden, MA: Blackwell Publishing.
Throughout its history Mexico has had many revolutions. The most famous perhaps is the Mexican Revolution from 1910-1920. The people of Mexico were getting tired of the dictator rule of President Porfino Diaz. People of all classes were fighting in the revolution. The middle and upper classes were dissatisfied with the President’s ways. The lower and working class people had many factors such as poor working conditions, inflation, inferior housing, low wages, and deficient social services. Within the classes everyone was fighting; men, women, and children all contributed to the fight for freedom from Diaz (Baxman 2). This revolution proved to be the rise and fall of many leaders.
De Cordoba, José & Lunhow, David. “The Perilous State of Mexico.” The Wall Street Journal. Dow
recently the U.S. supplied Mexico with a loan in order to save the falling value
Phil Angelides, B. T.-E. (2011). The Financial Crisis Inquiry Report. Washington: U.S. Government Printing Office.
This paper provides an overview of the crisis, outlines the major causes of the crisis, examine alternative solutions to the problem