BRL/MXN

 

By OECD PPP BRL is 18% overvalued (it seems a lot more when you visit, so I hear) and MXN is 71% undervalued.  The latter for obvious reasons, but they probably won’t get worse and might get better.

Amazing how obvious major new trends can be, even to journalists.  Ie the herd is often right.  I guess prospective weakness in Brazilian economy (consumer credit, iron ore and crude prices) and worsening trend in Latam politics on the one hand, and the beginnings of an improvement in political situation in Mexico + relocalisation now China starts to get quite expensive (and troublesome) as a place to produce.

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http://www.nytimes.com/2012/06/18/world/americas/group-of-20-meets-in-a-mexico-outperforming-brazil.html?_r=2&hp&pagewanted=all

“Stars appear to be increasingly aligned for an economic outperformance” by Mexico, a report in May from Nomura Securities concluded. “A changing of the guard is slowly but surely taking place.”

The reversed fortunes of Latin America’s two largest economies are a sharp contrast to the euphoria over Brazil’s prospects as recently as 2010, when the economy grew 7.5 percent in the last year of President Luiz Inácio Lula da Silva’s government.

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One Response to BRL/MXN

  1. Here's my latest post, "FOMC: ditch the sandbags, grab the buckets."
    http://socialmacro.blogspot.com/2012/06/fomc-ditc

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