Interest and Exchange Rates

• Interest rates and Exchange rate have a big influence in financial planning and capital investments...

• Exchange rate volatility (82,87,95) caused an increase on nominal interest rates
• Since 1995 interest rates have decreased due to
  • Exchange rate stability
  • Foreign investment
  • Downward trend of inflation
  • Lower perception of country risk
• Exchange rate is expected to remain stable but Overvaluation is reaching extremely high levels
  • Mexican Products become less attractive vs dollar.
  • For a US consumer, if current situation is favorable, a devaluation will make things even better.