Bloomberg News

Mexican Peso Rises as U.S. Housing Starts Boost Export Outlook

October 17, 2012

Mexico’s peso rebounded from its first loss in four days as a surge in U.S. new-home construction boosted the economic outlook for the Latin American country’s biggest trading partner.

The currency gained 0.4 percent to 12.7875 per U.S. dollar at 4 p.m. in Mexico City. The peso’s 9 percent rally in 2012 is the biggest among the dollar’s 16 most-traded counterparts tracked by Bloomberg.

Housing starts in the U.S. jumped in September to the highest level in four years, Commerce Department data showed today. Mexico depends on exports for about 30 percent of its gross domestic product, sending almost 80 percent of them to its northern neighbor.

“The data came out well,” Roberto Galvan, a currency trader at Intercam Casa de Bolsa SA, said by phone from Mexico City. “The measure that liquidity is flowing through U.S. businesses shows that Mexican businesses are going to have better sales.”

Starts jumped 15 percent to an 872,000 annual rate last month, the most since July 2008 and exceeding all forecasts in a Bloomberg survey of economists, the data showed. The median estimate of 81 economists surveyed by Bloomberg called for 770,000.

Optimism about the U.S. economy is mounting after reports also showed this week that industrial production and retail sales gained more than forecast last month.

Mexican fixed-rate, local-currency bonds had their fourth straight day of declines, following U.S. Treasuries lower, as the data is reducing demand for assets seen as a refuge.

Yields on Mexico’s peso bonds due in 2024 rose six basis points, or 0.06 percentage point, to 5.5 percent, according to data compiled by Bloomberg. The price fell 0.65 centavo to 139.81 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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