Mexico’s Peso Posts Biggest Weekly Drop Since January on EconomyBen Bain
Mexico’s peso fell, extending its biggest weekly decline since January, as the central bank cited slower-than-expected growth in the first quarter.
The currency fell 0.3 percent to 13.1337 per U.S. dollar at 10:50 a.m. in Mexico City, its lowest on a closing basis since March 24. The peso has fallen 0.6 percent since April 18 in its biggest weekly drop since the period ended Jan. 24.
Banco de Mexico policy makers left the target lending rate at a record low 3.5 percent today, saying in their statement that downside risks for Latin America’s second-largest economy remain. The decision came two days after the national statistics agency reported that retail sales unexpectedly fell 1.7 percent in February from a year earlier, compared with the 0.4 percent increase that was forecast by economists surveyed by Bloomberg.
“The data on sales and everything is not looking good enough to show that we are on the verge of a good run,” Pedro Tuesta, an economist at 4Cast Ltd., said in a telephone interview from Washington.
The central bank said its monetary policy is consistent with bringing inflation back to 3 percent, the midpoint of its target range.
Inflation will end the year at 3.92 percent, according to a monthly central bank survey published April 3, down from 4.09 percent in a February poll. The central bank’s official target is 2 percent to 4 percent.
Economists lowered their growth forecast for 2014 to 3 percent from 3.4 percent at the start of the year, according to the median estimate in an April 22 survey by Citigroup Inc.
While the central bank cited slower-than-expected quarterly growth, the national statistics reported today that economic activity rose 1.74 percent in February from a year earlier, more than the median forecast of economists surveyed by Bloomberg.
Yields on government peso-denominated bonds maturing in 2024 climbed one basis point, or 0.01 percentage point, to 6.24 percent. They were up four basis points for the week.