Interest Rates in Mexico: The Role of Exchange Rate Expectations and International Creditworthiness
AbstractThe link is explored between interest rates on domestic financial assets in Mexico and expectations of exchange rate changes and perceptions about default risks contained in Mexico's external debt. Interest rate differentials between peso- and U.S. dollar-denominated assets are shown to have reflected concerns about the exchange rate policy during the period considered. The evidence also suggests that the interest rate on a U.S. dollardenominated Mexican domestic asset is linked to the yield implicit in the secondary market price for external debt issued by Mexico.
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Bibliographic InfoArticle provided by Palgrave Macmillan in its journal Staff Papers - International Monetary Fund.
Volume (Year): 38 (1991)
Issue (Month): 4 (December)
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Web page: http://www.palgrave-journals.com/
Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK
Other versions of this item:
- Hoe Ee Khor & Liliana Rojas-SuÃ¡rez, 1991. "Interest Rates in Mexico - The Role of Exchange Rate Expectations and International Creditworthiness," IMF Working Papers 91/12, International Monetary Fund.
- C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
- F31 - International Economics - - International Finance - - - Foreign Exchange
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
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- Kaminsky, Graciela L. & Leiderman, Leonardo, 1998.
"High real interest rates in the aftermath of disinflation: is it a lack of credibility?,"
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- Graciela L. Kaminsky & Leonardo Leiderman, 1996. "High real interest rates in the aftermath of disinflation: is it a lack of credibility?," International Finance Discussion Papers 543, Board of Governors of the Federal Reserve System (U.S.).
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