Mexico’s Peso Erases Losses as Fed Maintains Asset Purchases
Mexico’s peso erased earlier declines after the Federal Reserve said it was maintaining its asset-purchase program, offsetting concern that the Latin American country’s export outlook was dimming.
The currency was little changed at 12.7208 per U.S. dollar at 4 p.m. in Mexico City, according to data compiled by Bloomberg. It’s up 1 percent this month.
The peso reversed intraday losses after the Fed statement spurred speculation “that we’ll continue to see a liquid environment” and that’s positive for the peso, according to Rafael Camarena, an economist at Grupo Financiero Santander Mexico SAB. The currency earlier slumped after the Commerce Department data showed that gross domestic product in the U.S., Mexico’s top export market, dropped at a 0.1 percent annual rate in the fourth quarter of last year.
The Federal Reserve said today that it’ll keep purchasing securities at the rate of $85 billion a month to lower unemployment and bolster the world’s biggest economy. Mexico sends about 80 percent of its exports to the U.S.
Moody’s Investors Service said in a report today that recent defaults by some Mexican states and local governments aren’t signs of systemic risk.
The yield on Mexico’s peso-denominated bond due in 2024 rose one basis point, or 0.01 percentage point, to 5.19 percent, according to data compiled by Bloomberg.
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