Bloomberg News

Mexican Peso Drops Most in Three Weeks on Moody’s Europe Review

December 13, 2011

Dec. 12 (Bloomberg) -- Mexico’s peso dropped the most in three weeks after a report showed industrial production rose less than forecast and Moody’s Investors Service said it will review the ratings of all European Union countries.

The peso declined 1.8 percent to 13.8176 per U.S. dollar at the close in Mexico City, from 13.5744 on Dec. 9. The currency fell 2.1 percent on Nov. 21. Local markets were closed for a national holiday today.

Disappointment spread after last week’s summit on the European debt crisis offered few new measures, with all except two of the top 25 emerging-market currencies tracked by Bloomberg declining today. Mexico’s factory output rose 3.3 percent in October from a year earlier, the national statistics agency said today, trailing the 3.9 percent median estimate of eight analysts surveyed by Bloomberg.

“It’s the global combined with the lack of liquidity because the Mexican market is off,” Eduardo Suarez, a Latin America currency strategist at Scotia Capital Inc., said in a telephone interview from Toronto.

The weaker-than-forecast industrial production data in Mexico may also have fueled the peso’s decline, according to Suarez.

“That should have an impact,” he said. “The numbers had been quite good and this one actually disappointed.”

Europe Debt Summit

European leaders unveiled a blueprint after meetings on Dec. 8 and 9 for a closer fiscal accord, adding 200 billion euros ($264 billion) to their bailout fund and tightening rules to curb future debts. They also said they would start a 500- billion-euro rescue fund next year.

The agreement offered few additional measures and doesn’t diminish the risk of credit-ranking revisions, Moody’s said in its Weekly Credit Outlook. “Our intention as announced in November is to revisit the level and dispersion of ratings during the first quarter of 2012,” the company said.

The yield on Mexico’s benchmark peso-denominated bond rose two basis points, or 0.02 percentage point, to 6.61 percent, according to data compiled by Bloomberg. The price of the security fell 0.24 centavo to 129.52 centavos per peso.

--With assistance from Catarina Saraiva in New York. Editors: Glenn J. Kalinoski, Richard Richtmyer

To contact the reporter on this story: Ben Bain in Mexico City at bbain2@bloomberg.net

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


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