Mexico’s Peso Tumbles to 18-Month Low as Intervention RejectedBen Bain
Mexico’s peso tumbled to the weakest since July 2012 along with other emerging-market currencies as concern grew that China’s economic recovery will stall and Turkey failed in attempts to stave off a slide in its lira.
The peso fell for a fourth day, dropping 0.4 percent to 13.46 per U.S. dollar at 4 p.m. in Mexico City, the weakest level on a closing basis since July 25, 2012. Today’s loss pushed the currency’s tumble on the week to 1.6 percent, according to data compiled by Bloomberg.
Emerging-market currencies slid as the concerns over China, Turkey and Argentina combined with mounting speculation that the U.S. will move quickly to reduce its $75 billion in monthly asset purchases that have bolstered demand for higher-yielding assets from developing countries. Argentina’s peso this week had its worst selloff since 2001 as the government scaled back efforts to support the currency.
“Everything that’s in emerging markets has done very badly,” Ramon Cordova, a trader at Banco Base SA, said in a telephone interview from San Pedro Garza Garcia, Mexico.
Mexico’s Finance Minister Luis Videgaray said today there’s no need to support the peso even after it’s fallen 3.1 percent to start the year.
It’s a “very liquid market, and we don’t see the need to inject liquidity, to intervene,” Videgaray said today in an interview at the World Economic Forum in Davos, Switzerland. In April, Mexico ended daily central bank dollar auctions that were used to shore up the peso.
The central bank “knows that it’s kind of pointless to intervene when Mexico is traded so widely abroad,” Pedro Tuesta, an economist at 4Cast Ltd., said in a telephone interview from Washington.
Yields on peso bonds due in 2024 jumped nine basis points, or 0.09 percentage point, to 6.58 percent, according to data compiled by Bloomberg. The price fell 0.85 centavo to 126.47 centavos per peso.