Mexico’s Peso Volatility Hits Five-Month High Amid Price Surges

Volatility in Mexico’s peso increased to a five-month high as prospects for a Standard & Poor’s rating upgrade and telecommunications-industry overhaul drove up the currency’s value over the past week.

One-month historical volatility, a gauge of the magnitude of the peso’s fluctuations over the period, is at the highest level since Oct. 12, according to data compiled by Bloomberg. Over the past five sessions the peso has gained 2.7 percent against the dollar, the most among major currencies tracked by Bloomberg.

S&P raised the outlook on the nation’s BBB rating to positive on March 12, saying in a statement that the country was improving its “economic resiliency.” A day earlier, President Enrique Pena Nieto unveiled a bill that gives regulators the power to break up phone and television companies to foster competition in Latin America’s second-biggest economy.

It’s been “one-sided” volatility, Pedro Tuesta, the chief economist at 4Cast Inc., said in a telephone interview from Washington. “We had the telecom reform, we had the S&P outlook upgrade.”

The currency gained 0.1 percent today to 12.4285 per U.S. dollar as of 3 p.m. in Mexico City.

Yields on peso bonds due in 2024 rose four basis points, or 0.04 percentage point, to 4.92 percent today, after yesterday falling to a record low 4.88 percent, according to data compiled by Bloomberg. The price fell 0.55 centavo to 145.26 centavos per peso today.

A report earlier today showed U.S. jobless claims declined unexpectedly, adding to signs of improvement for the Latin American country’s biggest export market. Mexico sends about 80 percent of its exports to the U.S.

“The liquidity dried up a little bit despite the good data point this morning,” Roberto Galvan, a currency trader at Intercam Casa de Bolsa SA in Mexico City, said in a telephone interview. “It’s part of an adjustment in portfolios.”

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