Mexico’s peso fell, extending its first monthly decline since October, as economists boosted forecasts for a cut in borrowing costs this year, with some projecting a rate cut as soon as next month.
The peso depreciated 0.1 percent to 12.7776 per U.S. dollar at 8:58 a.m. in Mexico City, bringing its monthly drop to 0.5 percent. The currency rallied 8.4 percent in 2012.
Nineteen of 20 economists projected the central bank will cut rates this year, up from eight two weeks earlier, according to a Citigroup Banamex survey published Feb. 20. Seven of the economists projected a cut on March 8.
“The number one factor was the expectation that they could cut rates,” Ramon Cordova, a currency trader at Banco Base SA in San Pedro Garza Garcia, Mexico, said in a phone interview.
Yields on peso bonds due 2024 were little changed today at 5.12 percent, leaving them down seven basis points, or 0.07 percentage point, in February. The price fell 0.01 centavo to 143.13 centavos per peso today.
Mexican central bank board member Manuel Sanchez said yesterday there is no need for the first interest-rate cut since July 2009. The peso rallied 0.6 percent yesterday after his comments.
“At this moment in time, I don’t see a case for a rate cut,” Sanchez said in an interview at Bloomberg’s office in Mexico City.
To contact the reporter on this story: Jonathan Levin in Mexico City at firstname.lastname@example.org
To contact the editor responsible for this story: David Papadopoulos at email@example.com