Mexico Peso Falls to Lowest in Two Months on Lack of Budget Deal
Mexico’s peso fell to a two-month low as concern U.S. lawmakers may fail to reach an agreement on budget cuts spurred equity losses worldwide as French, Spanish and Italian bonds tumbled.
The peso dropped 1.6 percent to 13.9426 per dollar at 9:23 a.m. in New York, from 13.7267 on Nov. 18. It fell as much as 1.7 percent to 13.9725 in intraday trading, the weakest level since it touched 14.0993 on Oct. 4. The currency has dropped for five consecutive trading sessions, the longest streak of daily losses since September.
The deficit-cutting congressional supercommittee will probably announce that it has failed to reach an agreement on $1.2 trillion of federal budget savings, a Democratic aide said in an e-mail. Signs that lawmakers have failed to reach an agreement caused U.S. equities futures markets to tumble as much as 1.8 percent, indicating the Standard & Poor’s 500 index will extend last week’s 3.8 percent decline.
“The other currencies don’t react as much to the futures market, but the peso market usually does,” said Benito Berber, a strategist at Nomura Securities Inc. “For the past month or so the peso has been trading weaker, responding to the higher volatility” caused by concern Europe’s debt crisis is worsening and global growth will slow, he said.
The yield on Mexico’s benchmark peso-denominated bond due in 2024 rose two basis points, or 0.02 percentage point, to 6.75 percent, the highest since Oct. 5.
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