Bloomberg News

Mexico Peso Advances After U.S. Manufacturing Exceeds Estimates

September 01, 2011

Sept. 1 (Bloomberg) -- Mexico’s advanced rose for a second day after data showed U.S. manufacturing unexpectedly expanded in August, signaling the two-year economic recovery may be sustained.

The peso strengthened 0.6 percent to 12.2609 per U.S. dollar at 1:15 p.m. New York time, from 12.3327 yesterday. It rose the second most today among 16 major currencies tracked by Bloomberg.

The Institute for Supply Management reported its factory index was 50.6 last month, exceeding economists’ projection that the gauge would drop to 48.5, according to the median forecast of analysts surveyed by Bloomberg. Figures greater than 50 signal expansion. The U.S. is Mexico’s top trading partner and the buyer of 80 percent of its exports.

“The peso is very sensitive to indicators in the manufacturing sector in the U.S.,” Enrique Alvarez, head of Latin America fixed-income research at IdeaGlobal in New York, said in a telephone interview. “There was anxiety that the slowdown in manufacturing in the U.S. may spill over to Mexico.”

The yield on Mexico’s peso bonds due in 2024 fell seven basis points, or 0.07 percentage point, to 6.27 percent, according to Banco Santander SA. The price of the security rose 0.78 centavo to 133.53 centavos per peso.

--Editors: Brendan Walsh, Glenn J. Kalinoski

To contact the reporter on this story: Ye Xie in New York at yxie6@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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