viernes, 17 de octubre de 2014

Oil...


When Hacienda sent the Administration’s budget proposal to Congress on September 5, US$82 for a barrel of Mexican export crude seemed extremely conservative. Five weeks later, it doesn’t look quite so unlikely: on October 16, Mexican export crude sold for US$76.70. The “puts” Hacienda purchases each year to protect the budget from a sharp drop in oil prices may be in the money in 2015. (With an exercise price of US$80, the puts are well worth their US$450 million estimated cost.) 

Lower oil prices mean larger trade and current account deficits. A larger current account deficit requires larger capital inflows to finance it – at a time when capital flows to emerging markets are declining. Bad luck for Mexico...