Mexico’s peso rose with most major currencies after the pace of U.S. home construction jumped in April, boosting the economic outlook for the Latin American country’s biggest trading partner.
The currency increased 0.4 percent to 12.9028 per dollar at 4 p.m. in Mexico City, driving the currency to its third straight weekly advance. The yield on benchmark peso securities maturing in 2024 was little changed at 5.88 percent, paring the decline this week to 0.1 percentage point, according to data compiled by Bloomberg.
The 13.2 percent jump in U.S. housing starts during April from a month earlier reported by the Commerce Department today is bolstering the peso because of the economic connection between Mexico and its northern neighbor, Rafael Camarena, an economist at Grupo Financiero Santander Mexico SA. Mexico, where gross domestic product expanded at the slowest pace since 2009 last year, sends about 80 percent of its exports to its northern neighbor.
“Externally there were good economic data from the U.S. in terms of housing,” Camarena said in a phone interview from Mexico City. “There had been some doubts over the construction sector in the U.S.”
Housing starts climbed to a 1.07 million annualized rate following March’s 947,000 pace, the Commerce Department reported today in Washington. Starts exceeded all analysts’ forecasts, with the median estimate of 79 economists surveyed by Bloomberg calling for 980,000. Permits for future projects increased, a sign activity might accelerate in coming months.
Mexico’s peso fell yesterday for the first time in three days after a surprise drop in U.S. industrial output damped the outlook for exports from the Latin American nation.
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