Mini Case
International Financial Management Fifth Edition
Mexico’s Balance of Payments Problem
Mexico experienced larger scale trade deficits, depletion of foreign reserve holdings, and a major
currency devaluation in December 1994, followed by the decision to freely float the peso. These events
also brought about a severe recession and higher unemployment in Mexico. Since the devaluation,
however, the trade balance has improved.
Investigate the Mexican experiences in detail and write a report on the subject.
Mexico’s key economic indicators; BOP, the exchange rate, and foreign reserve holdings, during
the period 1994-1995
Causes of Mexico’s balance of payments difficulties prior to the peso devaluation
Policy actions for prevent and mitigate the balance of payment problem and the subsequent
collapse of the peso
Lesson from the Mexican experience that may be useful for other developing countries
Key economic indicators document:
, Cause of Mexico’s balance of payments difficulties prior to the peso devaluation.
International Financial Management Fifth Edition
Mexico’s Balance of Payments Problem
Mexico experienced larger scale trade deficits, depletion of foreign reserve holdings, and a major
currency devaluation in December 1994, followed by the decision to freely float the peso. These events
also brought about a severe recession and higher unemployment in Mexico. Since the devaluation,
however, the trade balance has improved.
Investigate the Mexican experiences in detail and write a report on the subject.
Mexico’s key economic indicators; BOP, the exchange rate, and foreign reserve holdings, during
the period 1994-1995
Causes of Mexico’s balance of payments difficulties prior to the peso devaluation
Policy actions for prevent and mitigate the balance of payment problem and the subsequent
collapse of the peso
Lesson from the Mexican experience that may be useful for other developing countries
Key economic indicators document:
, Cause of Mexico’s balance of payments difficulties prior to the peso devaluation.
