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Mexico’s peso jumped the most in one month after European Central Bank President Mario Draghi said policy makers will do whatever is needed to preserve the euro, spurring a surge in higher-yielding assets.
The peso climbed 1.4 percent to 13.4138 per dollar at 4 p.m. in Mexico City, bringing its rally this year to 3.9 percent, the biggest among the most-traded currencies against the dollar tracked by Bloomberg. The peso posted its biggest one-day advance since June 29.
Emerging-market currencies rallied as Draghi’s comments fueled speculation that the ECB may be getting ready to introduce new measures to tame the region’s debt crisis. Spanish politicians have called on the central bank to do more after yields on the country’s bonds soared to euro-era records this week.
Draghi’s comments “caught markets pretty much in a classic short squeeze,” Win Thin, global head of emerging-market strategy at Brown Brothers Harriman & Co., said in a telephone interview from New York. “Everyone was short risk this week.”
Speculation that the European crisis would hurt Mexican exports helped make the peso Latin America’s worst-performing major currency in 2011.
The yield on Mexican local-currency bonds due in 2024 rose four basis points, or 0.04 percentage point, to 5.29 percent, according to data compiled by Bloomberg. The price fell 0.49 centavo to 142.77 centavos per peso.
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