Bloomberg News

Mexico Peso Rises as Industrial Output Fuels Economic Confidence

March 13, 2012

Mexico’s peso gained as the outlook for its exports improved after industrial production rose more than forecast in the Latin American country and retail sales in the U.S. climbed by the most in five months.

The peso strengthened 0.8 percent to 12.5592 per U.S. dollar at 3 p.m. in Mexico City, from 12.6602 yesterday, extending its advance this year to 11 percent, the most among major currencies tracked by Bloomberg.

Mexican industrial production rose 4.2 percent in January from a year earlier, higher than all 16 analyst estimates in a Bloomberg survey, the national statistics agency said today on its website. Retail sales in the U.S., the destination of 80 percent of Mexican exports, increased in February by the most in five months, Commerce Department figures showed today.

“Very strong industrial production numbers gave a boost to the Mexican peso,” Eduardo Suarez, a senior currency strategist at Scotia Capital Inc. in Toronto, said by e-mail. “Activity not only surpassed expectations on the headline number, but also looked solid across the individual components.”

Finance Minister Jose Antonio Meade said last week in an interview at Bloomberg headquarters in New York that exports will probably climb from last year’s record high as demand from the U.S. strengthens.

Mexican exports, which account for about 30 percent of the country’s gross domestic product, soared 17 percent last year to $350 billion. In 2011, Mexican output and exports of cars and light trucks hit a record, according to the nation’s Automobile Industry Association.

Mexican domestic sales of cars and light trucks rose 11.5 percent in February from the same month a year earlier, the auto organization known as AMIA, said today.

Fed Reserve

The peso extended gains after the Federal Reserve said the outlook for the world’s biggest economy has improved as the labor market gathers strength, according to Eduardo Rodriguez, currency trader at Casa de Bolsa Finamex SAB.

“This moved riskier currencies, those with higher yields like the peso,” Rodriguez said by phone from Guadalajara, Mexico. “There was fear that the economy wouldn’t be so strong, that the data in any moment could come out lower.”

Mexico sold all 7 billion pesos of 28-day Cetes and 8 billion pesos of the 91-day securities it offered today, the central bank said on its website. Mexico also sold all 8.5 billion pesos in 175-day bills it auctioned, the bank said.

The yield on Mexico’s peso-denominated debt due in 2024 rose three basis point, or 0.03 percentage point, to 6.41 percent, according to data compiled by Bloomberg. The price fell 0.30 centavo to 131.22 centavos per peso.

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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