Mexico’s peso fell to one-week low after a report showed retail sales unexpectedly dropped in August, boosting speculation that policy makers will cut the target lending rate this week to support the economy.
The currency slid 0.6 percent to 12.9286 per dollar at 10:08 a.m. in Mexico City on the prospect that reduced borrowing cost will make that nation’s assets less attractive abroad. That level was the weakest on a closing basis since Oct. 15. Yields on peso bonds maturing in December were unchanged at 3.40 percent, according to data compiled by Bloomberg.
“The expectation that this week the central bank will cut rates obviously reduces incentives for dollar inflows,” Eduardo Rodriguez, a trader at Casa de Bolsa Finamex SAB, said in a telephone interview from Guadalajara, Mexico.
Retail sales in Latin America’s second-biggest economy fell 2.2 percent in August from a year earlier, the national statistics agency reported today. The median forecast of analysts surveyed by Bloomberg was for a 1.2 percent increase.
JPMorgan Chase & Co. lowered its economic growth forecast for this year to 1.4 percent from 1.8 percent, saying today in a research report to clients that it expects Mexico’s policy makers to lower the benchmark rate by a quarter-percentage point on Oct. 25 to 3.5 percent.
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