Mexico’s peso declined the most in three weeks on mounting concern that slowing global growth will damp demand for the country’s exports.
The peso dropped 1.1 percent to 13.4590 per dollar at 4 p.m. in Mexico City, paring its rally this year to 3.5 percent, still the best among the most-traded currencies tracked by Bloomberg.
The peso fell along with emerging-market currencies worldwide as South Korea unexpectedly cut borrowing costs for the first time in more than three years, fueling concern that the effects of Europe’s debt crisis are spreading. Speculation that global growth is slowing and will hurt the market for Mexican exports helped make the peso Latin America’s worst-performing major currency in 2011.
Investors are concerned that emerging-market economic growth will be “worse than what was previously expected,” Mike Moran, a currency strategist at Standard Chartered Bank, said in a telephone interview from New York. “The surprise cut from the Bank of Korea has the market worried that there is something lurking beneath which was not evident before.”
Mexico sends 80 percent of its exports to the U.S.
The yield on Mexican local-currency bonds due in 2024 fell six basis points, or 0.06 percentage point, to 5.37 percent, according to data compiled by Bloomberg. The price rose 0.66 centavo to 141.90 centavos per peso.