Mexico’s peso advanced after a report showed U.S. manufacturing in better shape than analysts forecast, boosting the economic outlook for the Latin American country’s chief trading partner.
The peso appreciated 0.4 percent to 12.8138 per dollar at 1:07 p.m. in Mexico City, extending its rally this year to 8.8 percent, the biggest gain among the greenback’s 16 most-traded counterparts tracked by Bloomberg.
Manufacturing in the U.S. unexpectedly expanded in September, as the Institute for Supply Management’s U.S. factory index rose to 51.5 from 49.6 a month earlier, indicating the industry is stabilizing after three months of contraction. Mexico, which relies on exports for about 30 percent of its gross domestic product, sends 80 percent of them to the U.S.
“The peso has been on a tear as of late,” Aryam Vazquez, an economist for global emerging markets at Wells Fargo & Co., said by phone from Harrington Park, New Jersey. “Anytime you have strong ISM manufacturing prints here in the U.S. it bodes well for Mexico given the synergies.”
Mexico’s lower house of Congress approved legislation easing the process of hiring and firing workers over the weekend. Supporters say the bill would foster job creation by luring businesses out of the informal sector and spur faster economic growth in Latin America’s second-biggest economy. The Senate is expected to vote on the measure this month.
Economists covering Mexico expect the economy to expand 3.85 percent in 2012, after growing 3.9 percent last year, according to the monthly central bank survey published today.
Yields on peso bonds due in 2024 rose one basis point, or 0.01 percentage point, to 5.41 percent, according to data compiled by Bloomberg. The price dropped 0.09 centavo to 140.92 centavos per peso.
To contact the reporter on this story: Ben Bain in Mexico City at firstname.lastname@example.org
To contact the editor responsible for this story: David Papadopoulos at email@example.com