Mexico Peso Trades at 2014 High as Banxico Cites Growth Concern

Mexico’s peso traded at its highest level this year as the central bank refrained from discussing rate cuts in minutes of its April meeting even as it cited risks to economic growth.

The currency was little changed at 12.9480 per U.S. dollar in Mexico City, after closing yesterday at 12.9474, the strongest since Dec. 18. The peso gained 0.5 percent this week.

The central bank said in minutes of its April 25 meeting published today that first-quarter growth was slower than expected. To support Latin America’s second-largest economy, policy makers voted unanimously to hold the target lending rate at a record low 3.5 percent.

“The minutes were a little more neutral than we thought,” Juan Carlos Alderete, a currency strategist at Grupo Financiero Banorte SAB in Mexico City, said by phone. “We were expecting the possibility of a discussion about rate cuts, and we didn’t see that.”

Three-month peso historical volatility, a measure of the currency’s fluctuations, dropped for a 20th straight day, falling to 7.06 percent. The stretch of decreases is the longest since September 2012, according to data compiled by Bloomberg.

Benchmark government peso bonds rose this week the most since February after President Enrique Pena Nieto sent energy legislation to congress on April 30, easing concern that the opening of the state-controlled oil industry to private investment might be delayed.

Yields on peso bonds maturing in 2024 rose five basis points, or 0.05 percentage point, to 5.98 percent today, paring their decrease this week to 20 basis points.

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