Bloomberg News

Mexican Peso Posts Region’s Worst 2011 on Global Growth Concern

December 30, 2011

Dec. 30 (Bloomberg) -- Mexico’s peso posted the biggest currency drop in Latin America in 2011 amid concern that Europe’s debt crisis will erode appetite for the Latin American country’s exports.

The peso strengthened 0.4 percent to 13.9357 per U.S. dollar at the close in Mexico City, from 13.9966 yesterday. The currency fell 11.5 percent this year. It touched a four-week low of 14.0424 on Dec. 27.

The peso held near 14 per U.S. dollar amid low liquidity, said Ramon Cordova, a currency trader at Base Internacional Casa de Bolsa in Monterrey, Mexico. Emerging-market assets have slumped in 2011 as Europe’s debt crisis has damped expectations for global growth. Mexico’s currency fell 2.2 percent this month as euro-region leaders failed to ease investor concerns.

“It’s just overall concern,” Pedro Tuesta, a Washington- based economist for Latin America at 4Cast Inc, said by phone. “If the solution to the European crisis is disorderly, that is probably going to affect the U.S. If the U.S. is affected, Mexico is also going to be.”

Mexico sends about 80 percent of its exports to the U.S.

The yield on the peso-denominated bonds due in 2024 rose two basis points, or 0.02 percentage point, to 6.67 percent, according to data compiled by Bloomberg. The price fell 0.21 centavo to 128.85 centavos per peso. The yield on security declined 53 basis points in 2011.

--Editors: Richard Richtmyer, David Papadopoulos

To contact the reporter on this story: Ben Bain in New York at bbain2@bloomberg.net;

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


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