Mexican Peso Slides Toward 17 per Dollar as Crude Tumbles and Government Cuts Growth ForecastBy
Currency is Week's Biggest Loser Among Major Economies
Government's reduced GDP forecast helps erode demand
Mexico’s peso approached a record low 17 per dollar as crude extended its plunge a day after the government cut its growth forecast.
The peso is posting the biggest tumble among 16 major currencies this week as evidence of global economic slowdown erodes demand for emerging-market assets. The Mexican currency is sliding even after the central bank boosted intervention in July to support the currency, selling $123 million Friday.
“It’s increasingly looking like a move through 17 is inevitable,” Christian Lawrence, a currency strategist at Rabobank, said from New York. “The peso is looking very cheap indeed, but it’s moving away from fundamentals and being driven by market forces.”
The peso dropped 0.6 percent to 16.9024 per dollar at 9:57 a.m. in Mexico City, the weakest level since the currency’s revaluation in 1993. The average directional index rose to 33, above the level of 25 that some traders interpret as evidence that a trend is gaining momentum. Latin American currencies have lost 17 percent this year, according to a Bloomberg JPMorgan Chase & Co. index.
Mexico’s currency has followed a rout in developing nations after China’s yuan devaluation sparked concern of a further global slowdown and as rising short-term bond yields in the U.S. attract international investors. Mexico’s gross domestic product will expand 2 percent to 2.8 percent this year, down from a May forecast of 2.2 percent to 3.2 percent, Deputy Finance Minister Fernando Aportela said Thursday.
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