Mexico Peso Advances as Cyprus Controls Help Global GDP Outlook

Mexico’s peso rose as Cyprus unveiled capital controls to prevent outflows when banks reopen tomorrow, tempering speculation the island nation’s crisis will weigh on global economic growth

The peso climbed 0.1 percent to 12.3360 per U.S. dollar at 3 p.m. in Mexico City, bringing its rally this month to 3.6 percent, the biggest among 16 major dollar counterparts tracked by Bloomberg. The currency has advanced 4.2 percent this year, and it rose 8.4 percent in 2012. Mexico’s stock market will be closed March 28-29 for Easter holidays, although the peso will still be traded.

Cyprus announced capital controls to prevent outflows when banks reopen tomorrow after shutting for almost two weeks as the island faced financial collapse. The controls include a 300-euro ($383) daily limit on withdrawals, according to a decree from the Central Bank of Cyprus.

“News came out that they were going to implement capital controls” in Cyprus, helping the peso climb, Rafael Camarena, an economist at Grupo Financiero Santander Mexico SAB, said in a telephone interview. “Possibly with these new regulations they’ll be able to avoid a panic.”

Earlier today, the peso weakened as much as 0.6 percent as some investors sought refuge in the dollar before the extended weekend, according to Camarena.

Yields on peso bonds due in 2024 fell two basis points, or 0.02 percentage point, to 5 percent, according to data compiled by Bloomberg. The price rose 0.19 centavo to 144.28 centavos per peso.