Mexico Central Bank Says Taper Could Be Good for Emerging Markets

The winding down of the U.S. Federal Reserve’s asset purchasing program is generally viewed as negative for Mexico and other emerging markets.

Yet, if managed properly, the “taper” of the program could be positive for these markets, according to Agustin Carstens, Governor of the Bank of Mexico.

“If tapering leads to a more normal situation I think that that will be good for the markets and for Mexico,” Carstens, who was runner-up to Christine Lagarde when she was appointed managing director of the International Monetary Fund (IMF), said.

“Tapering is not tightening. It’s a less aggressive monetary policy.”

e added that communication by the Fed’s Open Markets Committee, which initiated forward guidance under Ben Bernanke, was key.

When speculation that tapering would be announced this autumn by the Fed began, capital flooded out of emerging markets including Mexico. The Mexican peso has weakened and its bond yields have risen when economic data has indicated the Fed may start the tapering process soon.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza