Economy-Business Essay Example | Topics and Well Written Essays - 500 words

Economy-Business - Essay ExampleSecondly this paper will talk of the possibility of the Mexican Peso being strong as a result of anticipated expose performance of the Mexican economy relational to the American economy in the future.There is little straits that under present economic circumstances the dollar an peso exchange rate is in a constant state of flux owing to the fact that these two currencies are allowed to float freely against wiz another and may experience changes resulting from market conditions. til now it should be noted that at one file in these nations histories the Peso was pegged to the Dollar. Under this fixed exchange rate regime there was effectively no risk associated with any appreciation or depreciation as the M$ was set at a fixed rate to the US$. However it was the case that there was significant inflation in Mexico in the early 90s so a crawling peg system emerged which meant that the peso need to be devaluated and as such the M$-US$ exchange rate would occasionally be altered by the central bank. However since Mexicos introduction into NAFTA the currency has been free to float at its market assess exchange rate with the United States.At Natural Detergent it has been argued by some senior executives that the relative value of the Peso would decline against the Dollar because the United States has a long history of outperforming the Mexican economy. understood in this statement is that the American economy has always outperformed the Mexican Economy and secondly a relegate performing economy has a stronger currency. According to the World Bank World Development Indicators (2009) the real annual growth rates for Mexico and the United States from 1997-2009 are available in the appendix 1 however the Mexican economy actually outpaced the growth of the American economy eight out of the last thirteen years. However according to MSN Money (2010) during the