Bloomberg News

Mexico Peso Falls to Weakest in a Year on Europe Debt Concern

September 14, 2011

Sept. 14 (Bloomberg) -- Mexico’s peso fell to its weakest level in more than a year, dropping to 13 per U.S. dollar for the first time since last September, as investors shunned emerging-market assets amid continued concern about Europe’s debt crisis.

The peso declined 0.4 percent to 12.9332 per U.S. dollar at 5 p.m. New York time, from 12.8840 yesterday. The currency declined as much as 1.1 percent to 13.0235 per U.S. dollar in intraday trading, the weakest level since it touched 13.0584 on Sept. 9, 2010. It last reached 13 per dollar on Sept. 10, 2010. The peso has fallen 4.6 percent this year, the second-worst performer among major Latin American currencies tracked by Bloomberg after Argentina’s peso.

Credit Agricole SA and Societe Generale SA, France’s second- and third-largest banks, had their long-term credit ratings cut one level by Moody’s Investors Service, which cited the risks posed by their investments in Greece. Investors are looking to cut their investments in emerging markets because of the European debt concerns, said Ram Bala Chandran, a Latin America currency and rates strategist at Citigroup Inc.

“People are unwinding emerging-market risk,” Bala Chandran said by phone from New York. “It’s the same story everywhere.”

Nineteen of 25 emerging-market currencies tracked by Bloomberg fell against the U.S. dollar.

The yield on Mexico’s benchmark peso-denominated bond due in 2024 fell eight basis points, or 0.08 percentage point, to 6.55 percent, according to data from Banco Santander SA. The price of the security rose 0.81 centavo to 130.48 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 every month since March 2010 to bolster foreign reserves. They allow the central bank to accumulate dollars, insuring against outflows of capital and limiting the peso’s appreciation.

--With assistance from Fabio Benedetti-Valentini in Paris. Editors: Glenn J. Kalinoski, Marie-France Han

To contact the reporter on this story: Benjamin Bain in New York at bbain2@bloomberg.net

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


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