Mexico’s Currency Gains as Global Stimulus Fuels Peso Bond Rally

Mexico’s currency strengthened and benchmark peso bonds rose to a record as speculation mounted that global central bank stimulus will encourage foreign investment in the country’s higher-yielding assets.

The peso climbed 0.1 percent to 12.1283 per U.S. dollar at 10:13 a.m. in Mexico City. It has strengthened 6 percent this year, the best performance among the most-traded Latin American currencies tracked by Bloomberg.

European Central Bank policy makers may cut interest rates this week, according to the majority of economists surveyed by Bloomberg. The Federal Reserve will consider renewing its commitment to bond buying at a two-day meeting starting tomorrow. Bank of Japan Governor Haruhiko Kuroda announced this month a doubling of monthly bond purchases, helping the peso surge 20 percent against Japan’s yen in 2013.

The peso and its peers “are appreciating this morning on market optimism generated by the continuation of global monetary stimulus in an environment of low inflation risks and a deceleration in growth,” Juan Carlos Alderete, a strategist at Grupo Financiero Banorte SAB, said in an e-mailed research report today.

Yields on peso bonds due in 2024 fell two basis points, or 0.02 percentage point, to 4.52 percent today, according to data compiled by Bloomberg. The price rose 0.21 centavo to 149.53 centavos per peso, a record high on a closing basis.

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