Bloomberg News

Mexico Peso Weakens as Europe Concern Outweighs Growth Optimism

November 24, 2011

Nov. 23 (Bloomberg) -- Mexico’s peso touched a two-year low as concern that Europe’s debt crisis may spread to Germany outweighed optimism about growth in Latin America’s second- biggest economy.

The peso dropped 1.4 percent to 14.1788 per U.S. dollar, from 13.9785 yesterday. It earlier reached 14.2251, the weakest level since March 2009. The currency has declined 13 percent this year, the worst performance among the six most-traded Latin American currencies tracked by Bloomberg.

Investors are shunning higher yielding assets after Germany failed to get bids for 35 percent of the 10-year bonds offered for sale today. Most emerging-market currencies fell against the dollar. The Mexican peso is reversing gains it made yesterday when a report from the national statistics agency showed Latin America’s second-biggest economy grew more than analysts forecast in the third quarter.

“We had the stronger Mexico data and that kind of helped it recover,” Win Thin, the global head of emerging-markets currency strategy at Brown Brothers Harriman & Co. in New York, said by phone. “Yesterday was sort of a calm day, but now today all the markets are going down. It’s going to be pretty hard for Mexico to withstand that.”

Retail sales in Mexico rose 4.7 percent in September from a year earlier, the biggest year-over-year jump since June, according to data released by the national statistics agency today. Economists had forecast an increase of 3.1 percent, according to the median estimate from 15 analysts surveyed by Bloomberg.

Mexico sold all of the 6.5 billion pesos of 28-day Cetes it offered at auction yesterday, the central bank said on its website. The government sold all of the 7.5 billion pesos of 91- day bills and all of the 8 billion pesos of 175-day Cetes, the bank said yesterday.

The yield on Mexico’s benchmark peso-denominated bond due in 2024 rose eight basis points, or 0.08 percentage point, to 6.87 percent. The price fell 0.78 centavos to 126.88 centavos per peso.

--With assistance from Jose Enrique Arrioja in Mexico City. Editors: Richard Richtmyer, Brendan Walsh

To contact the reporters on this story: Ben Bain in New York at;

To contact the editor responsible for this story: David Papadopoulos at

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