Mexico’s peso posted its biggest weekly decline in five months as Europe’s debt turmoil sapped demand for the Latin American nation’s higher-yielding assets.
The currency slid 0.4 percent to 13.5745 per U.S. dollar at 4 p.m. in Mexico City, extending its decline this week to 3 percent, the worst five-day performance since late November.
The peso slumped as Greece’s political leaders struggled to form a government after last weekend’s elections, intensifying Europe’s credit crisis. Concern over the continent’s fiscal woes drove investors to dump higher-yielding assets last year and helped make the peso the biggest loser among the most-traded Latin American currencies.
Mexico’s “fundamentals are good, but we’ve seen a general selloff in emerging markets,” Ramon Cordova, a currency trader at Banco Base SA in San Pedro Garza Garcia, Mexico, said in a phone interview.
The yield on Mexico’s peso bonds due in 2024 rose one basis point, or 0.01 percentage point, to 6.3 percent, according to prices compiled by Bloomberg. The price decreased 0.08 centavo to 132.07 centavos per peso.
Policy makers said the likelihood of an economic slowdown has abated, according to the minutes of last month’s meeting released today. The central bank’s board unanimously kept the benchmark lending rate at 4.5 percent for a 26th meeting.
One member of the five-member policy committee said peso weakness has relaxed monetary conditions in Mexico, according to the minutes. The majority said “that the posture of monetary policy in Mexico is being tightened more than desired due to the actions of other countries,” according to the document.
The peso rose earlier today as a report showing U.S. consumer confidence at a four-year high boosted the growth outlook for Mexico’s biggest trading partner.
To contact the reporter on this story: Ben Bain in New York at email@example.com
To contact the editor responsible for this story: David Papadopoulos at firstname.lastname@example.org