Mexico’s Peso Rises for First Time in Three Days on Retail Sales

Mexico’s peso snapped a two-day losing streak as a report showing that retail sales rose more than forecast in July eased concern that Latin America’s second-biggest economy is slowing.

The currency appreciated 0.5 percent to 12.7936 per dollar at 9:29 a.m. in Mexico City. Yields on benchmark peso bonds maturing in 2024 rose two basis points, or 0.02 percentage point, to 5.87 percent, according to data compiled by Bloomberg.

Retail sales rose 1.3 percent in the 12 months through July, the national statistics agency said today, exceeding the 0.5 percent median growth estimate among 15 economists surveyed by Bloomberg. Mexico cut its 2013 gross domestic product growth estimate to 1.8 percent in August from 3.1 percent amid slowing exports.

While the retail sales figures are from two months ago, the market’s reaction is amplified because investors are more closely scrutinizing economic data releases after the government made “such a strong reduction” in the growth projection, Ramon Cordova, a trader at Banco Base SA in San Pedro Garza Garcia, Mexico, said by phone. “There was a lot of weight placed on the fact that they cut their expectations for GDP growth for the year,” he said.

Mexico is selling 10-year dollar bonds in international markets to fund a buyback of shorter-term securities.

The government said in a regulatory filing in the U.S. that it will use as much as 75 percent of the cash raised from the sale to repurchase notes due from 2015 to 2020.

Mexico may issue the 10-year bonds to yield about 1.5 percentage points more than U.S. Treasuries, according to a person familiar with the transaction. The sale will be for at least $500 million, according to the person, who asked not to be identified because terms of the offering aren’t public.

To contact the reporter on this story: Ben Bain in Mexico City at bbain2@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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