June 2 (Bloomberg) -- Mexico’s peso gained the most in two weeks as European leaders expressed support for the euro and the creation of a region-wide finance ministry, pushing the dollar down and boosting demand for higher-yielding assets.
The peso advanced 0.7 percent to 11.6320 per U.S. dollar at 5 p.m. New York time, from 11.7091 yesterday. Earlier, it gained the most since May 19. The peso has strengthened 6.1 percent this year, the second-best performer among the major Latin American currencies tracked by Bloomberg, after the Colombian peso.
“Everyone is following the euro and European risk right now,” said Ramon Cordova, a currency trader at Base Internacional Casa de Bolsa in Monterrey. “Germany has come out saying they will support the euro, and France too.”
The euro rose 1.1 percent to $1.4491 in New York. European Central Bank President Jean-Claude Trichet said today that he favored a ministry of finance for euro nations and giving the European Union veto power on budget measures of countries that go “harmfully astray.” German Chancellor Angela Merkel said “we don’t have a euro problem.”
The yield on Mexico’s 10 percent peso bond due 2024 rose 4 basis points, or 0.04 percentage point, to 7.07 percent, according to Banco Santander SA. The price of the security fell 0.46 centavo to 125.42 centavos per peso.
Traders didn’t trigger any of the dollar options available today, the central bank said on its website. The bank has been buying as much as $600 million through the options monthly since March 2010, boosting foreign reserves and curbing the peso’s gain.
Foreign reserves rose to a record $127.9 billion in the week ending May 27, the central bank said this week in an e- mailed statement.
--Editors: Richard Richtmyer, Brendan Walsh
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