Mexico Peso Posts Second Straight Weekly Decline on Fed Outlook

Mexico’s peso posted its second consecutive weekly drop as signs of a stronger U.S. economy added to speculation that the Federal Reserve will keep reducing debt purchases that supported demand for emerging-market assets.

The currency depreciated 0.6 percent this week to 13.0563 per dollar after increasing 0.2 percent today. Yields on benchmark peso bonds due in 2024 dropped five basis points, or 0.05 percentage point, to 6.49 percent, paring the increase since Dec. 20 to 21 basis points.

“The economic data are validating the expectations that the Fed and analysts have for better growth,” Juan Carlos Alderete, a currency strategist at Grupo Financiero Banorte SAB, said in a telephone interview. “This supports the idea that the tapering will continue.”

Speculation is mounting that the Fed will soon take additional steps toward unwinding record monetary stimulus after saying Dec. 18 that it will cut its monthly bond buying by $10 billion to $75 billion. The Labor Department reported yesterday in Washington that U.S. jobless claims declined more than forecast in the week ended Dec. 21.

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