Mexico’s Peso Rallies as U.S. Fed Clarifies Timing of TaperingJonathan Levin
Mexico’s peso rose after the Federal Reserve cut its monthly bond purchases to $75 billion from $85 billion, clarifying the timing and magnitude of the reduction in stimulus for investors.
The peso appreciated 0.6 percent to 12.8787 per U.S. dollar at 4 p.m. in Mexico City, the strongest on a closing basis since Dec. 10. The currency was the best performer after the British pound among 16 major counterparts tracked by Bloomberg.
About 34 percent of economists surveyed by Bloomberg on Dec. 6 projected the Fed would announce today reductions in bond purchases, double the percentage in a Nov. 8 poll. Foreign investors poured into Mexico’s bonds earlier in 2013 as U.S. asset purchases compressed Treasury yields.
“People were positioned for it,” Eduardo Suarez, a Latin America foreign-exchange strategist at Bank of Nova Scotia, said in an e-mailed response to questions. “It took the uncertainty out of the way.”
Yields on peso bonds maturing in 2024 fell two basis points, or 0.02 percentage point, to 6.37 percent today, according to data compiled by Bloomberg. The price rose 0.19 centavo to 128.58 centavos per peso.