By Axel Threlfall
DAVOS, Switzerland Jan 24 Volatility in
currency markets will have some effect on Mexico, but the
country is well placed to "weather the storm," Finance Minister
Luis Videgaray said on Friday.
A full-scale flight from emerging market assets accelerated
on Friday, setting global shares on course for their worst week
this year and driving investors to safe-haven assets including
U.S. Treasuries, the yen and gold.
In an interview with Reuters television on the sidelines of
a gathering of business and political elites in the Swiss
mountain resort of Davos, Videgaray said Mexico would feel the
effects of the volatility but would not suffer greatly.
"It's going to have some impact in Mexico," he said.
"We're obviously watching very closely, but we think that
Mexico is fundamentally well prepared to weather the storm. It's
going to have an effect, we're already seeing it in our
currency, but it's not something we expect to be disruptive."
Mexico's peso currency slid to a 1 1/2 year low of 13.6044
on Friday as foreign investors became more averse to risk,
scared by a looming foreign exchange crisis in Argentina and
concerned about less monetary stimulus globally.
Still, the government hopes the Mexican economy will grow
nearly four percent this year and is looking forward to
attracting significant investment due to a string of economic
reforms passed by President Enrique Pena Nieto.
During the meetings in Davos, multinational companies
PepsiCo Inc, Nestle SA and Cisco Systems Inc
announced major investments in Mexico that together
totaled more than $7 billion.
Nevertheless, emerging markets are likely to face a volatile
2014 as the U.S. Federal Reserve scales back its stimulus
program to support the U.S. economy.
Videgaray said the volatility might have "some impact" on
investment but, he said, Mexico was ready for a Fed change of
"We expected this year to be a volatile year for emerging
markets as the Federal Reserve starts to taper the
unconventional stimulus measures," he said.
The minister said Mexico's currency, the peso, was quite
liquid but that the country might intervene if that changed.
"I don't see any problems of liquidity in the market for the
Mexican peso. We would intervene to provide liquidity in the
market. But this is not the case now," he said.