Mexico’s peso rose to the strongest level in 18 months after Greece said talks regarding a bailout package may conclude “soon,” fueling demand for higher- yielding, emerging-market assets.
The currency increased 0.2 percent to 12.1516 per U.S. dollar at 8:52 a.m. New York time, from 12.1795 on April 23. The peso touched 12.1319, the strongest since Oct. 14, 2008. The peso has risen 7.7 percent this year, the best performer against the U.S. dollar of the 16 major currencies tracked by Bloomberg.
“It’s clear that sentiment in the market is back in for risky assets,” said Clyde Wardle, an emerging-market currency strategist at HSBC Holdings Plc. “ There is still an expectation the situation in Greece will be resolved.”
Greek Finance Minister George Papaconstantinou expressed confidence yesterday that talks on a 45 billion euro ($60 billion) aid package from the International Monetary Fund and European Union will be “concluded rather soon.”
The yield on Mexico’s 10 percent peso bond due in 2024 fell two basis points, or 0.02 percentage point, to 7.6 percent, according to Banco Santander SA. The price of the securities rose 0.2 centavo to 121.1 centavos per peso.
Mexico’s pension fund association said April 23 that its members can invest as much as 20 percent of their assets in foreign securities. Mexican government-regulated pension funds, the largest institutional investors in the nation, agreed last year to require all new money in the funds to invest in local assets through Dec. 31.
The pension fund decision “was well known to the market,” said Ram Bala Chandran, an analyst at Citigroup Global Markets Inc. in New York. “I don’t think the market will care so much.”
To contact the reporter on this story: Andres R. Martinez in Mexico City at email@example.com