Bloomberg News

Mexican Peso Advances as Reserves Bolster Investor Confidence

May 29, 2012

Mexico’s peso rose for a second day as the central bank said international reserves increased for the first time in four weeks, boosting confidence in policy makers’ ability to support the currency as needed.

“In case of an event with foreign markets, the central bank has the ability to intervene” Mario Copca, a currency strategist at Metanalisis SA, said by phone from Mexico City. “We keep having good results.”

The peso appreciated 0.5 percent to 13.8832 per dollar at 4 p.m. in Mexico City. It has gained 0.4 percent in 2012 after touching 14.0775 on May 23, the weakest level on an intraday basis since Nov. 28.

International holdings advanced by $496 million to $154.3 billion last week after falling for the prior three weeks, the central bank reported.

It sold dollars on May 23 for the first time since 2009 to prop up the peso after it plunged to a six-month low. The central bank sold $258 million under a program that it has had in place since November in which policy makers offer $400 million daily at an exchange rate at least 2 percent weaker than the previous day’s official fix level to reduce volatility.

Concern Greece may abandon the euro has helped spur a 6.4 percent drop in the peso this month. Greece’s New Democracy party, which supports an austerity plan negotiated with international lenders, placed first in polls published May 26 as campaigning continued for next month’s election.

The yield on Mexican local-currency bonds due in 2024 fell four basis points, or 0.04 percentage point, to 6.19 percent, according to data compiled by Bloomberg. The price increased 0.48 centavo to 133.20 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


Too Cool for Crisis Management
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus