Mexico’s peso fell after a report showing U.S. companies added the fewest number of workers in seven months added to evidence that economic growth in the Latin American nation’s biggest trading partner is slowing.
The peso dropped 0.5 percent to 12.1934 per dollar as of 2:16 p.m. in Mexico City. Trading was limited because of a holiday in Mexico.
U.S. firms added 119,000 jobs to payrolls in April, the smallest increase since September, figures from the Roseland, New Jersey-based ADP Research Institute showed. Comments from Mexican central bank Governor Agustin Carstens on April 29 indicating that policy makers will consider cutting borrowing costs if inflation slows is also contributing to the peso’s fall, according to Eduardo Suarez, a currency strategist at Bank of Nova Scotia.
“Part of the peso decline is related to the U.S. data,” Suarez said in a telephone interview from Toronto. “The central bank has opened the door for further interest rate cuts.”
The peso pared some losses after the U.S. Federal Reserve said at its policy meeting that it will maintain its bond buying at a pace of $85 billion a month to stimulate the economy.
The peso may trade in a range between 12 per dollar and 12.31 per dollar in the coming weeks, according to Suarez.
Carstens said in an April 29 interview with Radio Formula that the central bank would consider lowering the target lending rate if annual inflation slowed to less than 4 percent, the upper end of policy makers’ target range. Consumer prices rose 4.72 percent in the 12 months through the first half of April.
The central bank’s board left the target lending rate at a record low 4 percent on April 26 after cutting it by a half- percentage point on March 8.
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