Mexico Peso Gains as U.S. Growth, ECB Loans Exceed Forecasts

Mexico’s peso rose to a four-day high after euro-area banks tapped the European Central Bank for more cash than forecast and stronger U.S. growth boosted the outlook for the Latin American country’s exports.

The peso gained 0.3 percent to 12.8065 per U.S. dollar at 1:53 p.m. in Mexico City, from 12.8444 yesterday. It earlier touched 12.7538, the strongest since Feb. 23. The currency has advanced 8.8 percent this year.

The number of financial institutions flocking to the ECB’s three-year loans soared to 800, and borrowing rose to a record in an operation that may boost the euro-area economy. U.S. gross domestic product climbed at a revised 3 percent annual rate last quarter, Commerce Department figures showed today. The median estimate of economists surveyed by Bloomberg was for no change from the previously reported 2.8 percent.

“It’s always significant when there’s a more positive outlook” for U.S. growth, Rafael Camarena, a Mexico City-based economist at Banco Santander SA, said by phone. “It’s the liquidity that the European Central Bank is injecting, plus the revision of the GDP number in the U.S. that’s helping the peso.”

The U.S. buys about 80 percent of Mexico’s exports.

The Frankfurt-based ECB said it will lend banks 529.5 billion euros ($706.2 billion) for 1,092 days, topping the 489 billion euros handed out to 523 institutions in the first three- year operation in December. Economists predicted an allotment of 470 billion euros in today’s tender, according to the median of 28 estimates compiled by Bloomberg.

The yield on peso-denominated debt due in 2024 rose one basis point, or 0.01 percentage point, to 6.5 percent, according to data compiled by Bloomberg. The price fell 0.12 centavo to 130.33 centavos per peso.

To contact the reporter 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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