Financialization of the exchange rate in Mexico and productive activity

Abstract

There is a close relationship between the strengthening of the process of financialization and the managment of different currencies. This relationship appears when in local monetary spaces the demand for local currency is abandoned in favor of other currencies or objects of speculation. This is a political economy that favors financial interests. In the management of local currencies, the new norm imposed by high finance has been one of elevated renumeration combined with low inflation. The exchange rate in Mexico is a function of the conditions and confidence and profitability of the financial sector. Exchange rate fluctuations become a determining factor in the fluctuations in treasury flows, assets, sales and profits of large corporations dedicated to productive activities and that deal in foreign currencies. This makes these corporations particularly attractive for local monopolistic financial capital, as it means not only maintaining their financial wealth and receiving their interest payments intact, but also being rewarded with a financial benefit in their own currency. The relative certainty regarding the evolution of the exchange rate in the mexican economy is necessary for an important sector of large corporations related to monopolistic financial capital to maintain their conditions of profitabilit.