Mexico’s currency dropped the most in three weeks as evidence of U.S. economic weakness dimmed the outlook for the Latin American country’s exports.
The peso depreciated 1.5 percent to 13.9159 per dollar at 3:30 p.m. in Mexico City, the biggest drop on a closing basis since May 31. The currency’s decrease today pared this year’s gain to 0.1 percent.
The currency slid today after the U.S. Federal Reserve Bank of Philadelphia reported that its general economic index fell to minus 16.6 in June, the lowest level since August, from minus 5.8 in the previous month. Economists forecast the gauge of regional manufacturing would improve to zero, the dividing line between growth and contraction, according to the median estimate in a Bloomberg survey.
“It came out way below what was expected, and this put a bit of pressure on the peso,” Pepe Curiel, a currency trader at Intercam Casa de Bolsa SA, said by phone from Mexico City. “Numbers that come out bad there hit us directly.”
Mexico depends on exports for about 30 percent of its gross domestic product, sending 80 percent of them to its northern neighbor.
All 25 of the most-traded emerging-market currencies tracked by Bloomberg dropped against the dollar on demand for a refuge as U.S. stocks retreated.
The yield on Mexican local-currency bonds due in 2024 fell 11 basis points, or 0.11 percentage point, to 5.60 percent, according to data compiled by Bloomberg. The price increased 1.25 centavo to 139.43 centavos per peso.