- Peso plunges 2.2 percent as emerging currencies sell off
- Mexican economy ‘very dependent on trade,’ says Eduardo Suarez
The Mexican peso, traders’ favorite currency for hedging trends in emerging markets, fell the most in a month amid mounting concerns over the outlook for global growth.
The currency fell 2.2 percent as of 12:59 p.m. in Mexico City on Friday, turning a weekly advance into a 0.4 percent retreat. Traders also sold Mexican local-currency debt. Yields on so-called Mbonos due in 2024 jumped 0.09 percentage point to 5.95 percent.
Mexican assets were swept up in a global rout of riskier assets as investors braced for a series of international events that could rattle markets including next week’s Federal Reserve meeting and Britain’s referendum on European Union membership in two weeks’ time. The Fed is has been debating how soon to raise interest rates again, and how quickly, amid conflicting economic data from the U.S., the destination for most of Mexico’s exports.
“Growth concerns have returned,” said Eduardo Suarez, a strategist for Latin America at Bank of Nova Scotia. “Mexico’s economy is very dependent on trade.”
The peso has already missed out on this year’s emerging-market rally as concern the Fed would raise interest rates has at times damped demand, while at other points speculation that Mexican exports could drop amid slower global growth has weighed on the tender. The peso has lost 8 percent so far in 2016.