Mexico Peso Drops as U.S. Budget Wrangling Damps Export Outlook
Mexico’s peso fell for a second day as concern mounted that U.S. politicians aren’t making headway on budget talks, damping the economic outlook for the chief destination of the Latin American country’s exports.
The currency dropped 0.2 percent to 13.0403 per U.S. dollar today in Mexico City. The peso is up 6.9 percent this year, still the best performance among the greenback’s 16 most-traded counterparts in 2012.
The currency slumped after Senate Majority Leader Harry Reid told reporters he was disappointed with the lack of progress lawmakers were making in reaching a deal to avoid $607 billion in tax increases and spending reductions set to begin in January. The Congressional Budget Office has said the so-called fiscal cliff could lead to a recession in the U.S., where Mexico sends about 80 percent of its exports.
“U.S. fiscal issues remain the most immediate risk to the global economic outlook, and the proverbial falling of the cliff would push the U.S. economy into a recession next year,” Aryam Vazquez, an economist at Wells Fargo & Co., said in an e-mailed message. “It’s that simple.”
Yields on Mexico’s peso bonds due in 2022 fell one basis point, or 0.01 percentage point, to 5.53 percent. The price increased 0.11 centavo to 107.19 centavos per peso.
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