After Salinas came to power, the government used the exchange rate as an anti-inflation tool (that is, the peso was pegged to the US dollar). Although the anti-inflation plan centered on the exchange rate peg is successful in reducing the inflation rate, it is inevitable that the currency will be overvalued because the depreciation of the domestic currency is less than the increase of the inflation rate, which will weaken the international competitiveness of domestic products. It is estimated that the peso is overvalued by 20% at purchasing power parity. In addition, such an anti-inflation plan has also generated a consumption fever and expanded the demand for imported goods. Despite the sharp increase in imports, Mexico's export growth is weak. During the period from 1989 to 1994, exports increased by 2.7 times and imports by 3.4 times. Therefore, starting from 1989, Mexico's current account deficit was $4 10 billion, and it expanded from 1994 to $28.9 billion. Theoretically speaking, as long as the capital account can maintain a corresponding surplus in the balance of payments, even if the current account has a large deficit, it does not mean that the national economy is facing a crisis. The crux of the matter is that the foreign capital that keeps the capital account surplus should not be speculative short-term foreign capital. It is this kind of capital that Mexico uses to make up the current account deficit. At the end of 1980s, the annual net indirect investment in Mexico was about 5 billion dollars, and by 1993, the net inflow of such foreign capital was close to 30 billion dollars. It is estimated that in 1990- 1994, the proportion of indirect investment in all foreign capital flowing into Mexico was as high as 2/3.
In order to stabilize the confidence of foreign investors, the government not only insists that the peso will not depreciate, but also replaces a short-term bond linked to the peso with a short-term bond linked to the dollar. Therefore, foreign investors sell short-term bonds linked to pesos in large quantities and buy short-term bonds linked to dollars. On the eve of the financial crisis, the short-term bonds issued by the Mexican government amounted to $30 billion, of which $65,438+167.6 billion expired in the first half of 1995, while the foreign exchange reserves were only several billion dollars. Facts show that it is unwise for the Mexican government to use short-term bonds linked to the US dollar to stabilize the confidence of foreign investors. Although this bond has achieved its goal in a short time, leaving more than 20 billion dollars of short-term foreign capital at home, it is more risky, because the decline in peso value, regardless of the magnitude, will reduce the profit of indirect investment, thus aggravating capital outflow and making the short-term bond market face greater turmoil. So by the second half of 1994, the Mexican government was in an increasingly passive situation. On the one hand, we can't get rid of our dependence on foreign indirect investment and short-term national debt; On the other hand, these two sources of funds make Mexico's economy more fragile, the government's room for manoeuvre is shrinking, and the influence of financial speculators is increasing. When the government announced the devaluation of the peso, financial speculators sold a lot of short-term government bonds.
Therefore, the reduction of foreign exchange reserves and the devaluation of peso are the direct causes of Mexico's financial crisis, and the deep root of the financial crisis is to make up for the huge current account deficit with speculative and liquid short-term foreign capital. The profound socio-economic causes of Mexico's financial crisis can be summarized as follows:
(1) The financial market is too open and too dependent on foreign capital.
Through financial opening and encouraging foreign capital inflow, Mexico's annual foreign capital inflow is as high as 25 billion to 35 billion US dollars. However, foreign trade exports did not increase significantly, and the proportion of foreign trade imports in GDP rose from 9.4% in 1987 to 3 1% in 1993. Therefore, the current account deficit of the balance of payments hovers at a high level of $23 billion, which makes the entire Mexican economy excessively dependent on foreign capital.
(2) Political instability has hit investors' confidence.
1994 In the second half of the year, peasant armed riots broke out one after another in Mexico. Colosio, the presidential candidate of the ruling Revolutionary Institutional Party, and Ruiz, the general secretary, were assassinated one after another, and the power struggle within the ruling party and between the ruling party and the opposition party was fierce. Political instability has hit the confidence of foreign investors, and foreign investment in Mexico has begun to decrease, while divestment has increased. Mexico had to use its foreign exchange reserves to make up the huge foreign trade deficit, which made the foreign exchange reserves drop from1700 million dollars at the end of June 1994 to 6 billion dollars in February 1998, a decrease of 65% in less than two months.
③ Ignoring the linkage between the foreign exchange market and the stock market, the financial policy pays attention to one thing and loses the other.
The original intention of Mexican government to announce currency devaluation is to prevent capital outflow, encourage exports and curb imports, so as to improve the country's balance of payments. However, in the case of social and economic instability, it is easy to cause inflation, and it also makes foreign investors who invest in the stock market suffer losses due to the devaluation of the peso, which leads to the stock market falling. The decline in the stock market, in turn, aggravated the devaluation of the Mexican currency, further worsening the crisis.