Mexico’s peso fell before the Federal Reserve’s policy statement tomorrow on concern the U.S. central bank will reduce stimulus that fueled demand for emerging-market assets.
The peso depreciated 0.2 percent to 12.9559 per U.S. dollar at 4 p.m. in Mexico City, the most among 16 major counterparts tracked by Bloomberg after Australia’s currency, South Africa’s rand and the British pound. The peso extended its decline this year to 0.8 percent.
“Caution is dominating the market ahead of the Fed decision tomorrow,” Juan Carlos Alderete, a foreign-exchange strategist at Grupo Financiero Banorte SAB in Mexico City, said in an e-mailed research note to clients.
About 34 percent of economists surveyed by Bloomberg on Dec. 6 predicted that the Fed will probably start to reduce its $85 billion of monthly bond purchases when it concludes a two-day policy meeting tomorrow. Foreign investors poured into Mexico’s bonds earlier this year as the U.S. asset-buying program compressed Treasury yields.
Yields on benchmark peso bonds due in 2024 fell one basis point, or 0.01 percentage point, to 6.39 percent today, according to data compiled by Bloomberg. The price climbed 0.02 centavo to 128.40 centavos per peso.
The government sold three-year fixed-rate bonds to yield 4.38 percent at an auction today, three basis points higher than the previous sale, with demand that was 2.24 times the amount of debt offered. Yields on one-month bills at auction decreased seven basis points to 3.27 percent.