Mexico’s Peso Set for Monthly Drop on Fed Tapering Speculation

Mexico’s peso posted its first monthly decline since August as speculation the Federal Reserve will trim record stimulus sank demand for higher-yielding emerging-market assets.

The currency depreciated 0.3 percent to 13.1093 per U.S. dollar at 4 p.m. in Mexico City, leaving it 0.7 percent weaker in November.

Fewer Americans than projected filed applications for unemployment benefits last week, a sign that the labor market is showing resilience, a U.S. report showed Nov. 27. Mexico’s bonds have benefited from investment flows as U.S. yields plummeted.

“It’s the effect of the uncertainty about how the monetary policy is going to change with the Federal Reserve,” Rafael Camarena, an economist at Grupo Financiero Santander Mexico SAB, said in a telephone interview from Mexico City.

Yields on peso bonds maturing in 2024 rose five basis points, or 0.05 percentage point, to 6.20 percent today, according to data compiled by Bloomberg. The yields were up 17 basis points this month.

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