The improvement in the terms of trade together with capital inflows in the form of foreign direct investment has induced a sharp peso appreciation against the dollar and against a basket of currencies. I will return to talk about this later. Turning now to inflation, the expansion of demand arising from the improvement of terms of trade placed moderate pressure on production capacity.
As you know, Mexico wasn’t hit by a financial crisis in 2008 but nevertheless we felt the need to be prepared. By having a much stronger preventive attitude, we want to stop the events that really could compromise our inflation targeting objective.