Mexico Peso Rallies Most in Three Weeks as U.S. Sales Boost Export Outlook

Mexico’s peso jumped the most in three weeks as record U.S. Thanksgiving retail sales boosted optimism for exports from Latin America’s second-biggest economy.

The peso rose 1.5 percent to 14.0258 per U.S. dollar at the close in Mexico City, from 14.2305 on Nov. 25, for the biggest advance since Nov. 3. It’s lost 12 percent this year, the most among the six most-traded Latin American currencies tracked by Bloomberg.

Retail sales totaled $52.4 billion during the U.S. holiday weekend and the average shopper spent $398.62, up from $365.34 a year earlier, the Washington-based National Retail Federation said yesterday, citing a survey conducted by BIGresearch. Mexican exports increased by $1.27 billion in October from September to $30 billion, according to preliminary data from the national statistics agency. The U.S. is the destination for 80 percent of Mexico’s exports.

Positive retail sales numbers from the U.S. “favor good expectations for Mexican exports,” Rafael Camarena, an economist at Banco Santander SA in Mexico City, said by phone. Signs of improved “economic data in the U.S. is favorable here,” he said.

Speculation that European leaders may agree on new measures to help resolve the region’s debt crisis is also fueling the peso’s rise, Camarena said.

Draft Guidelines

European leaders drafted a framework for the region’s bailout fund. The rescue fund may insure bonds of debt-stricken countries with guarantees of 20 percent to 30 percent, depending on financial markets, according to guidelines that finance ministers will discuss this week.

Euro-area finance ministers are due to meet in Brussels tomorrow as governments bid to regain the confidence of financial markets.

The yield on Mexico’s benchmark peso-denominated bond due in 2024 fell for the first time in six days, declining 13 basis points, or 0.13 percentage point, to 6.86 percent. The price for the security rose 1.29 centavos today to 126.98 centavos per peso.

Traders didn’t trigger any of the dollar options available today, the central bank said on its website. The bank has been buying as much as $600 million through the options every month since March 2010 to bolster foreign reserves. They allow the central bank to accumulate dollars, insuring against outflows of capital and limiting the peso’s appreciation.

To contact the reporters on this story: Ben Bain in New York at bbain2@bloomberg.net;

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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