Mexico Peso Posts Weekly Gain on ECB Program, Fed Speculation

Mexico’s peso posted its biggest weekly gain since June on speculation the European Central Bank’s bond-buying proposal will blunt the euro region’s debt crisis and the Federal Reserve will add to monetary stimulus.

The peso rose 0.6 percent to 12.9808 per U.S. dollar at 4 p.m. in Mexico City, pushing the weekly advance to 1.6 percent, the biggest such jump since the five-day period ended June 29.

U.S. Labor Department figures today showed the economy added 96,000 workers last month, below the median estimate in a Bloomberg survey and adding to bets on central bank stimulus. The peso gained yesterday after the European Central Bank announced plans for unlimited bond purchases to stem the crisis.

“While the report in the U.S. came out bad, below expectations, it reinforces a bit the idea that the Fed has to act,” Rafael Camarena, an economist at Banco Santander SA (SAN), said by phone from Mexico City. “That’s helped the peso.”

Mexico’s central bank left its key interest rate unchanged at a record low 4.5 percent amid forecasts that a jump in inflation will ease by year end. The inflation rate climbed to 4.57 percent in August, a 29-month high, after a drought and bird-flu outbreak pushed up prices of corn, eggs and bread.

Yields on Mexico’s benchmark bonds due in 2024 rose one basis point to 5.59 percent today.

To contact the reporters on this story: Jonathan J. Levin in Mexico City at; Ben Bain in Mexico City at

To contact the editor responsible for this story: David Papadopoulos at

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