Mexican Peso Volatility Falls as Secondary-Law Plans Published

The Mexican peso’s implied volatility fell to a 10-month low on speculation lawmakers will approve rules implementing constitutional changes that the government says will boost growth.

One-month implied volatility on options for the peso, which reflects traders’ projections of price fluctuations, decreased to 8.50 percent today, according to data compiled by Bloomberg. The peso dropped for the first time in five sessions, falling 0.1 percent to 13.1283 per dollar.

President Enrique Pena Nieto proposed new telecommunications regulations this week following constitutional changes passed last year. Moody’s Investors Service said when it raised Mexico’s credit rating in February that changes to boost competition in telecommunications and end the nation’s oil-drilling monopoly will add 1 percentage point to the nation’s long-term growth rates.

“The world is returning to normal, and little by little each currency will come to reflect the fundamentals of its country,” Eduardo Rodriguez, a trader at Casa de Bolsa Finamex SAB, said in a telephone interview from Guadalajara, Mexico. “In the case of Mexico, the expectations are good because of the secondary laws.”

Yields on benchmark Mexican peso bonds maturing in 2024 fell for a fourth straight day, declining five basis points, or 0.05 percentage point, to 6.20 percent, according to data compiled by Bloomberg. The price of the securities rallied 0.46 centavo to 129.66 centavos per peso.

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