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Mexico’s Peso Set for Worst Quarter Since ’11 on Fed Speculation

Mexico’s peso headed for its worst quarterly decline since 2011 as speculation increased that the Federal Reserve will curtail stimulus that fueled gains in higher-yielding emerging-market assets.

The peso fell 0.2 percent to 13.0485 per U.S. dollar at 9:55 a.m. in Mexico City, bringing the quarterly slump to 5.5 percent, the most since the three months ended September 2011. Yields on benchmark peso bonds due in 2024 fell three basis points, or 0.03 percentage point, to 5.91 percent today, trimming the quarterly increase to 0.90 percentage point.

Growing speculation that U.S. policy makers may start tapering the stimulus program known as quantitative easing has sapped demand for emerging-market securities, including the peso, which topped the 16 major currencies tracked by Bloomberg in the first quarter with a 4.2 percent rally. Fed Chairman Ben S. Bernanke said on June 19 that policy makers may start tapering the bond buying program later this year if the world’s largest economy keeps improving.

“The main factor of influence has been the change in expectations for Fed monetary policy,” Juan Carlos Alderete, a strategist at Grupo Financiero Banorte SAB, said in an e-mailed response to questions today. The peso “was a crowded consensus trade, and we’ve seen said positioning strongly reduced since mid-April.”

William C. Dudley, president of the Federal Reserve Bank of New York, said yesterday any decision to reduce the pace of asset purchases wouldn’t represent a withdrawal of stimulus, and that an increase in the Fed’s benchmark interest rate is “very likely to be a long way off.”

Mexico sends 80 percent of its exports to the U.S.

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