March 1, 1995
Recognizing the seriousness of the situation, the US government stepped forward with a plan to prop up the peso and stem the hemorrhage of capital from the beleaguered country. The IMF also came to the table, committing an unprecedented amount of funds—up to $17 billion. Meanwhile, Citibank and JP Morgan attempted to rally commercial banks to provide a private package of funds for the country.
Investors represent the wild card of the equation. Having unceremoniously dumped Mexican stocks and bonds following the devaluation, questions remain as to how soon, if ever, they will return to the table in significant numbers. Will the international aid package entice investors back to Mexico? And
The year 1995 promises to be a difficult one for Mexico. Government, banks and corporations now face a number of challenges. Astronomical domestic interest rates and severely restricted capital inflows point to a serious recession in 1995, with effects to be felt throughout the Mexican economy