Mexico’s peso headed to its biggest weekly decline this year as concern over European growth damped demand for higher-yielding assets.
The peso fell 0.2 percent to 12.8349 per U.S. dollar at 7:53 a.m. in Mexico City, extending its decline this week to 1.3 percent. A close at that level would be the biggest weekly fall since the period ended Dec. 16. It has strengthened 8.5 percent this year, the most among major currencies tracked by Bloomberg.
While Mexico isn’t dependent on Europe for trade, the peso is weakening as a dimmer economic outlook there damps demand for emerging-market assets, said Rafael Camarena, an economist at Banco Santander SA. European services and manufacturing output contracted in March, according to an initial estimate from London-based Markit Economics this week. U.K. consumer confidence declined in February, according to Nationwide Building Society, the customer-owned lender.
“What’s affected the peso this week was a return to the reality of European economic data,” Camarena said by phone from Mexico City. “The peso could recover next week.”
The yield on Mexico’s peso bonds due in 2024 fell four basis points, or 0.04 percentage point, to 6.49 percent, according to data compiled by Bloomberg. The price rose 0.38 centavo to 130.33 centavos per peso.
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