- Central bank's $800 million in dollar sales not enough
- Mexico's peso joins global selloff in riskier assets
The Mexican peso fell to a new record low as $800 million in dollar sales by the central bank this week was overshadowed by speculation that global growth will falter.
The peso fell 1.5 percent as of 11:31 a.m. in Mexico City, leading losses among the world’s most-traded currencies, as emerging-market assets were swept up in a global selloff of all but the safest securities. Global equities tumbled toward a bear market as investors lost faith in central banks’ ability to support the worldwide economy.
The peso has dropped 10 percent this year, almost four times as much as the next-worst performer among a basket of 16 major currencies, as investors sell off the most liquid and easily tradeable emerging-market assets. The central bank sold $400 million in auctions Thursday to support the currency, after selling $400 million on Feb. 8, when bank Governor Agustin Carstens said that peso weakness isn’t justified by the country’s economic fundamentals.
Win Thin, the global head of emerging-markets strategy at Brown Brothers Harriman & Co. in New York, said the peso’s weakness is increasing pressure on policy makers to raise interest rates. The peso weakened to as low as 19.2258 per dollar, a record, before paring losses to 19.2159.
It “raises the odds of Banco de Mexico tightening," Thin said. "Not to defend the peso per se, but more to limit the second-round inflation impact."