Mexico’s peso bonds rallied the most in four months as slower-than-forecast inflation in March added to speculation that policy makers will cut benchmark borrowing costs for the first time since 2009.
The yield on Mexico’s fixed-rate peso-denominated debt due in December 2013 fell 14 basis points, or 0.14 percentage point, to 4.57 percent at 4 p.m. in Mexico City, according to data compiled by Bloomberg. It’s the biggest daily yield decline since Nov. 30. The price rose 0.22 centavo to 105.58 centavos per peso.
Annual inflation slowed to 3.73 percent from 3.87 percent in February, the national statistics institute said today. Economists predicted inflation of 3.76 percent, according to the median of 12 estimates in a Bloomberg survey.
The inflation report “could give support to the half of the board that leans towards easing,” Eduardo Suarez, a senior currency strategist at Scotia Capital Inc., said in a telephone interview from Toronto. “Lower inflation means lower nominal rates.”
The central bank said in the minutes of its March 16 rate meeting that it would consider lowering borrowing costs if inflation remained in check.
The peso rose 0.1 percent to 12.9712 per dollar, from 12.9842 on April 6. The currency is the biggest gainer among major currencies this year, having advanced 7.4 percent.
The yield on Mexico’s peso-denominated debt due in 2024 fell 11 basis points, or 0.11 percentage point, to 6.37 percent, according to data compiled by Bloomberg.
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