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Mexico Peso Declines for First Time This Week on Economic Recovery Outlook

Mexico’s peso fell for the first time this week after the U.S. Federal Reserve said the economic recovery is slowing, reducing demand for higher-yielding, emerging-market assets.

The currency declined 0.7 percent to 12.6951 per dollar at 8:33 a.m. New York time, from 12.6017 yesterday.

“The tacit admission from the Fed that things are turning worse is proving unhelpful for risk appetite,’ said Clyde Wardle, an emerging-market currency strategist at HSBC Holdings Plc. “We are seeing a broader contraction of risk appetite on the Feds downgrading of the U.S. recovery.”

The Fed left the overnight interbank lending rate target in a range of zero to 0.25 percent yesterday, where it’s been since December 2008. The pace of the economic recovery is likely to be “more modest,” the Federal Open Market Committee said yesterday.

The yield on Mexico’s 10 percent bonds due in 2024 fell three basis points, or 0.03 percentage point, to 6.79 percent, according to Banco Santander SA. The price of the security rose 0.29 centavo to 129.33 centavos per peso.

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

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