Mexico’s peso headed for a third weekly gain after Finance Ministry officials said they don’t plan to intervene to curb the currency’s appreciation.
The peso strengthened 0.5 percent this week to 12.3731 per U.S. dollar at 8:15 a.m. in Mexico City, according to data compiled by Bloomberg. It gained 0.4 percent today after the government said inflation rose more than forecast in the first half of March.
Finance Minister Luis Videgaray said yesterday at the Bloomberg Mexico Economic Summit that the government will allow the peso to float freely, even as its 3.9 percent rally exceeds gains in all other major currencies this year. Deputy Finance Minister Fernando Aportela damped speculation that Mexico’s currency commission would step in to curb the gains in an interview on March 17 when he said officials weren’t considering capital controls or other measures.
“Coming out and reaffirming that there will be no intervention is a good thing,” Italo Lombardi, an economist at Standard Chartered Plc, said in a telephone interview from New York. “It helps the peso.”
Mexico’s central bank has been offering $400 million daily of its reserves since November 2011 at a peso exchange rate at least 2 percent weaker than the previous day’s level to limit volatility in the currency. The currency commission suspended the sale of dollar options used in part to curb gains in the peso when introducing the daily auctions.
Consumer prices rose 0.52 percent in the first half of March, the national statistics institute, known as Inegi, reported today on its website. The median estimate of economists surveyed by Bloomberg was for 0.28 percent. The annual rate rose to 4.12 percent, above the ceiling of the central bank’s target range for the first time this year.
Mexico’s inflation-linked bonds rallied. Yields on so- called Udibonos maturing in December 2014 tumbled eight basis points, the most since October, to 0.74 percent, according to data compiled by Bloomberg.
Yields on Mexico’s peso bonds due in 2024 rose one basis point, or 0.01 percentage point, to 4.99 percent today, according to data compiled by Bloomberg.
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