Mexico Peso Falls for Second Straight Day as Oil Plunges to 3-Month Low

Mexico’s peso fell the most in a week as crude oil, its largest export, traded to the lowest price in three months.

The currency slid 1.3 percent to 12.5899 per dollar at 5 p.m. New York time, from 12.4306 yesterday, the most since May 6, when it fell 2.01 percent.

“Oil breaking its support is clearly not helpful,” said Clyde Wardle, an emerging-market currency strategist at HSBC Holdings Plc. “If oil slides back to $70 a barrel, it’ll come more into market focus. It’s clearly not an encouraging sign for the future” of the economic recovery.

Crude oil dropped 3.3 percent to $71.95 a barrel in New York, the lowest settlement since Feb. 5, on concern Europe’s sovereign-debt crisis will reduce global economic growth and fuel consumption.

The yield on Mexico’s 10 percent peso bond due in 2024 rose eight basis points, or 0.08 percentage point, to 7.741 percent, according to Banco Santander SA. The price of the security fell 0.76 centavo to 119.66 centavos per peso.

The loss trimmed the peso’s gain to 4 percent this year, the best performance among 16 major currencies tracked by Bloomberg. The peso gained 2.2 percent this week.

Mexican government-regulated pension funds, the nation’s biggest institutional investors, had 1.238 trillion pesos ($98.3 billion) under management in April, the regulator known as Consar said in a statement today on its website.

Traders didn’t exercise today any of the $600 million in dollar options available this month, the central bank said on its website. The central bank has been auctioning the options monthly, allowing it to buy dollars to raise foreign reserves after the peso reached a record low.

To contact the reporter on this story: Andres R. Martinez in Mexico City at amartinez28@bloomberg.net

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