Mexico’s peso fell to its weakest level in a month after policy makers in the U.S. and Europe and a jobs plan from U.S. President Barack Obama failed to ease investor concerns about a global economic slowdown.
The peso dropped 1.4 percent to 12.6919 per U.S. dollar at 5 p.m. New York time, from 12.5146 yesterday. The currency fell to 12.6980 in intraday trading, the weakest level since 12.7686 on Aug. 9. It has fallen 2.8 percent this year, the second-worst performer among major Latin American currencies tracked by Bloomberg after Argentina’s peso, and has retreated 2.2 percent this week.
Obama yesterday detailed a $447 billion plan to boost hiring and called on Congress to pass his package after jobs growth stalled last month in the U.S., the destination of about 80 percent of Mexico’s exports, fueling concern the recovery in the world’s biggest economy is faltering. European Central Bank President Jean-Claude Trichet said yesterday that “downside risks” for the region’s economies have risen and Federal Reserve Chairman Ben S. Bernanke stopped short of providing details on new plans to boost growth.
“Risk assets have been suffering,” Ramon Cordova, a currency trader at Base Internacional Casa de Bolsa in Monterrey, Mexico, said in a telephone interview. “The market continues to be pretty nervous about the situation in Europe and the economic situation in the U.S. hasn’t been positive.”
Twenty-four of 25 major emerging-market currencies tracked by Bloomberg declined against the dollar.
Investors are concerned that Greece isn’t implementing austerity moves fast enough to get a sixth payment from last year’s bailout. Greek Finance Minister Evangelos Venizelos dismissed “rumors” of a Greek default, saying the nation is committed to “full implementation” of the terms of a July agreement for a second aid package.
Mexico’s peso will trade at an average of 11.9 per U.S. dollar this year and an average of 12.2 per dollar next year, according to the 2012 budget proposal that the government of Mexican President Felipe Calderon submitted yesterday to lawmakers.
The yield on Mexico’s benchmark peso-denominated bond due in 2024 rose 14 basis points, or 0.14 percentage point, to 6.37 percent, according to Banco Santander SA data. The price of the security fell 1.48 centavo to 132.40 centavos per peso.