Mexico’s peso strengthened, heading for its second consecutive day of gains, on speculation an improving U.S. growth outlook will buoy Latin America’s second- biggest economy.
The peso rose 0.6 percent to 12.6688 per U.S. dollar at 8:02 a.m. in Mexico City, from 12.7474 on March 23. The increase added to a 0.5 percent advance the currency posted on March 23, sending it to consecutive daily gains for the first time since the period ended March 9. It’s up 10 percent this year, the most among major currencies tracked by Bloomberg.
Federal Reserve Chairman Ben S. Bernanke said today that a decline in the unemployment rate in the U.S., the destination for 80 percent of Mexican exports, may reflect “a reversal of the unusually large layoffs that occurred during late 2008 and over 2009.” Central bank Governor Agustin Carstens said last week that Mexico’s economy is likely to expand at the top end of the 3 percent to 4 percent target range.
“We open this week with better risk sentiment,” Flavia Cattan-Naslausky, a local markets strategist at RBS Securities Inc. in Stamford, Connecticut, said in a telephone interview. “The underlying trends in the U.S. growth data are the same where we continue to see improving growth, though however still trend growth.”
With Mexican economic expansion staying close to last year’s 3.9 percent, inflation will remain subdued as the bank’s monetary policy helps stabilize inflationary expectations, Carstens said in an interview before participating in a Bloomberg CEO roundtable discussion in Mexico City on March 23. “Based on information we have today, probably a rate of growth closer to 4 percent would be foreseeable,” he said.
Mexican economic data has been “actually quite good” and the peso should continue to benefit from any improvement in the U.S., as a so-called high-beta currency, Cattan-Naslausky said.
The yield on Mexico’s peso bonds due in 2024 was little changed at 6.51 percent, according to data compiled by Bloomberg. The price fell 0.05 centavo to 130.07 centavos per peso.
To contact the reporter on this story: Ben Bain in New York at firstname.lastname@example.org
To contact the editor responsible for this story: David Papadopoulos at email@example.com