Bloomberg News

Mexican Peso Falls as Spain Concern Saps Demand for Risky Assets

April 16, 2012

Mexico’s peso declined for a second day as mounting concern over Spain’s ability to meet its financing needs discouraged demand for higher-yielding assets.

The peso fell 0.3 percent to 13.2129 per U.S. dollar at 4 p.m. in Mexico City, from 13.1775 on April 13. The currency has gained 5.5 percent this year.

Spain’s Prime Minister Mariano Rajoy said his country must slash its budget deficit to maintain access to financing. The peso earlier recouped losses after a report showed retail sales in the U.S., the destination for 80 percent of Mexican exports, rose more than forecast in March. Concern over Europe’s debt crisis helped make the currency Latin America’s worst-performing currency last year.

“It seems that concerns about Spain will take a long time to be digested by the market, and the Mexican peso is one of the barometers of these rising pressures,” Benito Berber, a strategist for Latin America at Nomura Securities Inc., said in a phone interview from New York.

The yield on Mexico’s peso-denominated bonds due in 2024 rose two basis points, or 0.02 percentage point, to 6.31 percent, according to data compiled by Bloomberg. The price fell 0.25 centavo to 132.07 centavos per peso.

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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