Bloomberg News

Mexican Peso Posts Longest Losing Streak Since August on Europe

November 13, 2012

Mexico’s peso posted its longest losing streak since August as a drop in German investor confidence fueled concern that Europe will weigh on global growth and the market for the Latin American country’s exports.

The peso fell 0.3 percent to 13.2477 per dollar at 4 p.m. in Mexico City, its fifth straight day of declines and the currency’s longest streak of drops since the period ended Aug. 30. It’s up 5.2 percent this year.

The peso fell with most emerging market currencies as the ZEW Center for European Economic Research suggested that Europe’s debt crisis is having an increasing impact on Germany. Concern over the European crisis, which helped make the peso Latin America’s worst-performing major currency in 2011 on concern lower global growth would damp exports, is growing as the regional finance ministers and the International Monetary Fund failed to agree on how Greece will repay its debt.

“I would expect it to weaken further,” Flavia Cattan- Naslausky, a strategist at Royal Bank of Scotland Group Plc, said in a phone interview from Stamford, Connecticut. “The finance ministers in Europe, their public disagreement with regards to Greece, has really sort of tainted a bit the external appetite.”

The difference in the number of wagers by hedge funds and other large speculators on a gain in the peso, versus those betting on a decline, is shrinking, figures from the Washington- based Commodity Futures Trading Commission show. Net longs fell by 11,587 contracts to 114,422 last week. They rose in September to 141,256, the highest level since at least 1995.

Greece Outlook

Creditors led by Germany opted late yesterday to keep money flowing to Greece instead of risking a default that could lead to the nation’s exit from the euro.

European finance ministers put off until Nov. 20 a decision on how to cover additional Greek needs and left unclear whether the IMF will continue to contribute. IMF Managing Director Christine Lagarde disagreed with a decision by the representatives of the 17-nation euro zone to postpone the goal of getting Greece’s debt down to 120 percent of gross domestic product by two years, until 2022.

Greek Finance Minister Yannis Stournaras told a European Parliament hearing that yesterday’s euro-area meeting was “constructive” and he expects an accord to be reached on rescue funding at a Nov. 20 meeting.

Yields on Mexico’s peso bonds due in 2024 rose two basis points, or 0.02 percentage point, to 5.44 percent, according to data compiled by Bloomberg. The price fell 0.26 centavo to 140.36 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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