Mexican Peso Strengthens as U.S. Jobs Data Boosts Export Outlook

Mexico’s peso gained after a private report showed companies boosted hiring in the U.S., adding to optimism that a pickup in the world’s biggest economy will fuel demand for the Latin American country’s exports.

The peso climbed 1 percent to 12.8732 per U.S. dollar at 4 p.m. in Mexico City from 13.0011 yesterday, the first advance in four days. The peso is up 8.3 percent this year.

Companies in the U.S., the destination for about 80 percent of Mexican exports, added 216,000 workers last month, according to a report by ADP Employer Services. Latin America’s second- biggest economy may expand closer to 4 percent this year rather than 3.5 percent should the U.S. economy keep improving, central bank Governor Agustin Carstens said last month in Mexico City

The U.S. employment number “will help the peso a bit,” Eduardo Rodriguez, currency trader at Casa de Bolsa Finamex SAB, said by phone from Guadalajara, Mexico. “But the situation with Greece in reality hasn’t been resolved, so it’s going to continue weighing on the exchange rate.”

The peso tumbled the most in 12 weeks yesterday after a report showed Europe’s economy shrank while investors awaited details of Greece’s debt swap.

Investors with 58 percent of the Greek bonds eligible for the nation’s debt swap have so far indicated they’ll participate, putting the country on the verge of the biggest sovereign restructuring in history. Greece’s largest banks, most of the country’s pension funds, and more than 30 European banks and insurers including BNP Paribas SA, Commerzbank AG and Assicurazioni Generali SpA have pledged to accept the offer.

Swap’s Goal

The goal of the swap, which runs until March 8, is to reduce by 53.5 percent the total of privately held Greek sovereign debt, helping the country avert an uncontrolled default.

The peso extended gains after the Wall Street Journal reported that Federal Reserve officials are considering a program to buy long-term mortgage or Treasury bonds by printing new money, then effectively “sterilize” or tie up the new money by borrowing it back for short periods at low rates, according to Finamex’s Rodriguez. The aim would be to relieve concern about future inflation, the Journal reported.

“That would help liquidity continue to be very strong on a global level and obviously benefit higher-yielding currencies,” Rodriguez said. “If risk is minimized, the peso could still strengthen a lot more.”

The yield on the country’s peso-denominated debt due in 2024 fell seven basis points, or 0.07 percentage point, to 6.43 percent, according to data compiled by Bloomberg. The price rose 0.77 centavo to 131.02 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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