Bloomberg News

Carstens Sees Mexico Peso Slump End as Risk Aversion Eases

October 24, 2011

(Adds Carstens comment in third paragraph.)

Oct. 24 (Bloomberg) -- Mexican central bank Governor Agustin Carstens said the peso will appreciate against the U.S. dollar once global risk aversion recedes.

The currency’s decline against the U.S. dollar has to do with external factors including Europe’s debt crisis, he said yesterday at a business conference in Queretaro, Mexico.

“I have no doubt that” investors “will soon come to the conclusion that the macroeconomic framework of Mexico is among the strongest, and that’s going to make capital return,” Carstens said. “This is precisely one of the virtues of a flexible exchange rate: that it allows for these adjustments. In fact, what Mexico has had is an external shock.”

The peso has declined 14 percent in the past three months, making it the worst performing major Latin American currency, amid slower U.S. growth expectations and as Europe’s debt crisis roiled global markets.

The peso strengthened 1.6 percent to 13.4636 per U.S. dollar at 11:26 a.m. in Mexico City.

--Editors: Richard Jarvie, Robert Jameson

To contact the reporters on this story: Jonathan J. Levin in Mexico City at jlevin20@bloomberg.net; Crayton Harrison in Mexico City at tharrison5@bloomberg.net.

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net.


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