Mexico’s Currency Declines Most in a Week on U.S. Economy
Mexico’s peso fell the most in a week after Federal Reserve Chairman Ben S. Bernanke said the U.S., the nation’s largest trading partner, is barely expanding.
The peso dropped 0.3 percent to 12.3675 per dollar at 5 p.m. New York time, from 12.3369 on Dec. 3. It was the biggest one-day drop since Nov. 26.
The Fed may expand bond purchases beyond the $600 billion announced last month to spur growth, as the U.S. is “not very far from the level where the economy is not self-sustaining,” Bernanke said in an interview broadcast yesterday by CBS Corp.’s “60 Minutes” program. His comments came after a report last week showed U.S. employers added 39,000 jobs in November, trailing estimates among economists surveyed by Bloomberg.
“A weak U.S. economy is not good for Mexico,” said Francisco Diez, director of emerging-market trading at RBC Capital Markets in New York. “The peso is underperforming on that basis.”
The U.S. purchases about 80 percent of Mexico’s exports.
The yield on Mexico’s 10 percent bond due in 2024 fell 7 basis points, or 0.07 percentage point, to 6.96 percent, according to Banco Santander SA. The bond’s price rose 0.73 centavo to 127.11 centavos per peso.
Traders didn’t trigger any of the $600 million in dollar options available today. The central bank has been auctioning the options monthly, allowing it to purchase dollars to boost foreign reserves after the peso reached a record low last year.
To contact the editor responsible for this story: David Papadopoulos at firstname.lastname@example.org