its goods in a country were the peso is weak against the U.S. dollar. The Mexican businesses will be forced to buy only the necessities due to the unfavorable exchange rate. However, on the positive side, if the Mexican businesses expect that the peso will devalue further, it may decide to purchase big ticket items now in hopes of beating any further devaluation. A Mexican company whose primary business is exporting Mexican made products to the U.S. will enjoy the weak peso, strong dollar economy. Imports from Mexico into the U.S. has resulted in an $8.6 billion trade deficit with Mexico for the first six months of 1995. While the Mexican company is paying for its labor and overhead with weakened pesos, it is receiving a stronger U.S. dollar for its goods. The company can request payment in the stronger U.S. dollar and invest them into various financial instruments until the peso can rebound or is needed to continue operations. VII. Opinion The signs are growing ever stronger that Mexico's determined adherence to its economic austerity program is setting the stage for a remarkably solid and sustainable recovery from the recent financial crisis. The country's Bolsa stock index has rebounded more than 60 percent from its February low, the peso has stabilized, compared to what it has done in the past, and Mexico's recent $500 million bond offering was oversubscribed by $1.3 billion. Mexico is making clear progress in improving its debt structure, and strong export growth is producing a dramatic correction in Mexico's current account imbalance. Mexico has a balanced federal budget and a largely privatized economy. The North American Free Trade Agreement and Mexico's other trade pacts are continuing to play a significant role in creating new opportunities for Mexican businesses. A number of U.S. companies have chosen to create co-production partnerships with Mexican firms over geographically more remote partners in Asia because of Mexico's p...
