Bloomberg News

Mexican Peso Rises From Seven-Week Low on Third-Quarter Growth

November 23, 2011

Nov. 22 (Bloomberg) -- Mexico’s peso rose from a seven-week low after a report showed Latin America’s second-biggest economy grew more than analysts forecast in the third quarter.

The peso gained 0.3 percent to 13.9785 per U.S. dollar at the close in Mexico City, from 14.0165 yesterday, the weakest level since Oct. 3. The currency has declined 12 percent this year, the worst performance among the six most-traded Latin American currencies tracked by Bloomberg.

The peso reversed earlier declines today and rose after the national statistics agency said Mexico’s gross domestic product expanded 4.5 percent in the third quarter from a year earlier, exceeding the 3.9 percent median estimate from 17 analysts surveyed by Bloomberg.

The better-than-forecast Mexican GDP “gives a certainty and a stability” to the peso, Omar Martin del Campo, head trader at Banco Ve Por Mas SA in Mexico City, said by phone. “But we’re not bullet-proof from the international situation, what’s happening in Europe and in the U.S.”

Agriculture output rose 8.3 percent on higher corn and sorghum production, the agency, known as Inegi, said. The service sector grew 4.8 percent, led by media and financial services. Secondary activities expanded the least, by 3.4 percent, led by the construction and manufacturing industries, the report showed.

Credit Line

The currency extended gains after the International Monetary Fund said it revamped its credit line program to encourage countries facing outside shocks to turn to the fund with few conditions attached, as European leaders fail to end their debt turmoil.

“The GDP number was I think was what gave support today,” Eduardo Suarez, senior Latin America currency strategist at Scotia Capital Inc., said in a telephone interview from Toronto. “The IMF also gave risk in general support.”

The Mexican currency had dropped earlier today after data showed the U.S. economy, the destination of 80 percent of Mexico’s exports, expanded less than previously estimated in the third quarter.

The yield on Mexico’s benchmark peso-denominated bond due in 2024 rose four basis points, or 0.04 percentage point, to 6.80 percent. The price fell 0.41 centavos to 127.66 centavos per peso.

--With assistance from Jose Enrique Arrioja in Mexico City. Editors: Jose Enrique Arrioja, Glenn J. Kalinoski

To contact the reporters on this story: Ben Bain in New York at bbain2@bloomberg.net; Nacha Cattan in Mexico City at ncattan@bloomberg.net

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


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