Mexico’s peso rallied as a bigger than forecast U.S. drop in new home sales reduced speculation that a tapering of Federal Reserve stimulus was imminent.
The peso strengthened 0.8 percent to 12.9893 per U.S. dollar at 11:47 a.m. in Mexico City, the biggest gain among major Latin America currencies after Brazil’s real. Mexico’s currency pared its weekly drop to 0.6 percent after tumbling 2.3 percent in the prior week, the most since June.
“It’s a response to the overshoot that we saw,” Roberto Galvan, a trader at Intercam Casa de Bolsa SA, said in a phone interview from Mexico City. “It was an exaggerated move.”
Sales of newly built homes in the U.S. decreased 13.4 percent in July, the Commerce Department reported today in Washington. The median forecast of economists surveyed by Bloomberg was for a 2 percent drop. Last month’s decline was the biggest since May 2010.
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