Bloomberg News

Mexican Peso Rises Most in Four Weeks on Global Growth Optimism

October 24, 2011

Oct. 24 (Bloomberg) -- Mexico’s peso rose the most in four weeks as mounting optimism about global economic growth spurred demand for higher-yielding, emerging-market assets.

The peso advanced 2.3 percent to 13.3708 per U.S. dollar as of 5 p.m. New York time, from 13.6752 on Oct. 21, for the biggest gain since Sept. 23. The Bloomberg JPMorgan Latin American Currency Index rose 1.6 percent.

China’s manufacturing, as measured by an index compiled by HSBC Holdings Plc and Markit Economics, probably grew in October for the first time in four months and Japanese exports rose more than forecast last month. Stocks and commodities gained as European leaders held their 13th crisis summit in 21 months, debating how to cut Greece’s debt burden and protect the region’s banks.

“Emerging-market currencies have lagged moves in G-10 currencies,” said Ram Bala Chandran, a Latin American currency and rates strategist at Citigroup Inc. in New York. “The Mexican peso is playing catch-up.”

The peso will appreciate against the dollar once global risk aversion recedes, central bank Governor Agustin Carstens said at a conference in Queretaro, Mexico.

European leaders meeting in Brussels yesterday ruled out tapping the European Central Bank’s balance sheet to boost the region’s rescue fund in a crisis-management summit. German Chancellor Angela Merkel will seek backing from her country’s parliament to bolster the euro bailout fund as the region’s leaders seek a way to leverage it to more than 1 trillion euros ($1.4 trillion).

Euro Gains

The euro rose to as high as $1.3957, its strongest intraday level since Sept. 8. The Stoxx Europe 600 Index reached an 11- week high today.

“This is chiefly being driven by Europe,” said Omar Martin del Campo, head trader at Banco Ve Por Mas SA in Mexico City. “There had been some nervousness in recent days, but with the talks in Europe, there is less uncertainty in international markets than there was before.”

The yield on the Mexico’s benchmark peso-denominated bond due in 2024 fell seven basis points, or 0.07 percentage point, to 6.52 percent. The price of the security rose .74 centavo to 130.60 centavos per peso.

Mexico’s consumer prices rose 0.61 percent in the first half of October, the fastest pace in 11 months, on higher electricity costs, the national statistics institute said today.

--With assistance from Boris Korby in New York. Editors: Glenn J. Kalinoski, Marie-France Han

To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Sebastian Boyd in Santiago at sboyd9@bloomberg.net

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


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