Jonathan Heath, deputy governor of the Bank of Mexico: “There have been a lot of structural changes over the past decade that have provided deep changes in the uses and sources of dollars coming into the Mexican economy. Ten years ago, Mexico was a net exporter of oil and relied strongly on foreign portfolio flows. Additionally, the foreign holdings of public debt were relatively high. Back then, the exchange rate was largely determined by flows related to these factors. Today, Mexico is a net importer of oil, has large automotive and tourism surpluses and receives around $60 billion a year in family remittances. Also, foreigners hold much less public debt, and foreign direct investment is far higher. In spite of a relatively large monetary policy rate differential with the U.S. Federal Reserve, Mexico’s economy has experienced net capital outflows. Nevertheless, while the main reason for the peso’s strength has been the weakness of the U.S. dollar, the peso has…”