Mexico’s peso posted its biggest quarterly decline since 2008 on concern U.S. economic growth is slowing and as Europe struggles to contain its sovereign debt crisis.
The peso slid 1.4 percent to 13.8973 per U.S. dollar at 5:20 p.m. New York time, from 13.71 yesterday. It depreciated 16 percent since June 30, the second-worst performer among major Latin American currencies after Brazil’s real. The peso fell 2.4 percent this week and 11.3 percent in September.
“The slow growth outlook in the U.S. and worldwide is a downside risk to the Mexican economy and that tends to hit the peso pretty hard,” said Aryam Vazquez, an emerging-markets economist at Wells Fargo & Co. in New York. “Markets may also be considering the possibility of the central bank cutting rates this year and that makes the peso less attractive as well.”
The Mexican peso is the most liquid currency in the region and, being deliverable, is easy to trade making it a popular hedge for other emerging-market assets, said Flavia Cattan-Naslausky, a strategist at RBS Securities Inc. in Stamford, Connecticut.
The yield on Mexico’s benchmark peso-denominated bond due in 2024 rose nine basis points, or 0.09 percentage point, to 6.82 percent, according to data from Banco Santander SA. The price of the security fell 0.95 centavo to 127.58 centavos per peso.