Mexico’s Peso Gains for First Time in Three Days as Bonds Rally

Mexico’s peso rose for the first time in three days as investors boosted demand for the nation’s local debt following the enactment of constitutional changes that open the energy industry to more private investment.

The peso appreciated 0.3 percent to 13.1075 per U.S. dollar today in Mexico City, paring its loss this week to 0.4 percent. Yields on fixed-rate peso bonds due in 2024 dropped five basis points, or 0.05 percentage point, to 6.34 percent, according to data compiled by Bloomberg. The move extended the weekly decrease to 15 basis points, the biggest since the five days ended Oct. 18

Mexico’s benchmark bonds have risen since Standard & Poor’s rewarded President Enrique Pena Nieto with a rating increase on Dec. 19 to BBB+, the third-lowest investment grade ranking, for passing legislation to break the country’s 75-year oil monopoly. One-month historical volatility, a gauge of the size of the peso’s fluctuations during the period, fell to 9.96 percent today, the lowest level since Dec. 11, according to data compiled by Bloomberg.

“The peso has exhibited a lack of volatility at a time when other emerging-market currencies are showing higher volatility,” said Michael Shaoul, the chief executive officer at New York-based Marketfield Asset Management LLC, which oversees about $19 billion. “That in itself will help draw in additional investment capital.”

Growth of Latin America’s second-biggest economy, estimated to have slowed to 1.30 percent last year, is forecast to accelerate to 3.47 percent in 2014, according to data compiled by Bloomberg.

Before it's here, it's on the Bloomberg Terminal.