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Recessions occur because the Fed's short-term interest rates determine the level of all rates in the economy: the Fed's rate hike implies higher rates for credit to companies, for mortgage loans and for consumer loans, etc.
June 1, 2022
Mexico | Remittances grew 16.5%, but due to inflation, households received only 8.2% more
Inflation has also hit the remittances-receiving households in Mexico, although they grew 16.5% in US dollars in April, they increased 8.2% in real terms. Something similar happened in March, the flow of remittances in US dollars increased 12.9%, but in real terms they advanced 4.1%.
As part of the package against inflation and famine (PACIC) implemented by the federal government to contain inflationary pressures, the removal of tariffs on various food products for one year was announced.
Information corresponding to 1Q22 indicates that the current account registered a deficit of USD 6.5 billion, whose annualized figure is equal to 1.9% of GDP. For 2022 we forecast that the current account will post a deficit of USD 12.0 billion (0.9% of GDP).
A series of global and domestic macro fundamentals drove recent sharp RMB depreciation. We do not think it will lead to systematic financial instability risk as it is synchronized with depreciation of other currencies amid FED tightening measures. The PBoC has counter-cyclical tools to maintain the RMB exchange rate stable.
In the United States, after more than a decade in which inflation was consistently below the Federal Reserve's (FED) target, it has risen to levels not seen in 40 years.
The trade war between China and the US and, to a lesser degree, the effects of the pandemic caused the former to lose 4.2 percentage points of share in the US market of manufactured imports between 2018 and 2021.
We analyze the underlying macro reasons behind the recent RMB exchange rate sharp depreciation and explain our forecast of RMB till year end.