Mexico Peso Jumps as Draghi Comments Boost Allure of Local Bonds

  • ECB president signals additional stimulus could come this year
  • Currency rises most in a week, extending month-to-date gains

Mexico’s peso climbed after the European Central Bank said it will consider fresh economic stimulus measures, adding to the appeal of the Latin American country’s higher-yielding securities.

The currency gained 1.1 percent to 16.4716 per dollar on Thursday in Mexico City, rising the most since Oct. 14 and extending its monthly advance to 2.7 percent.

After posting the worst performance on record during the first three quarters of 2015, the peso is rebounding amid speculation that slower global growth will prompt central banks to hold off on increasing borrowing costs. Near-zero interest rates in the U.S. have led foreign investors from BlackRock Inc. to Pacific Investment Management Co. to boost holdings of Mexico’s local currency debt, with a majority of fixed-rate government securities now in the hands of global bondholders.

“There’s some relief that the global central banks’ put will remain in place,” Juan Carlos Alderete, a strategist at Grupo Financiero Banorte SAB in Mexico City, said in an e-mail. “Mexico’s fixed income still looks attractive relative to most emerging markets.”

European Central Bank President Mario Draghi said Thursday that policy makers will investigate fresh stimulus measures to boost the economy in December and that options include a further reduction in the deposit rate. Officials earlier left their key interest rates unchanged. The benchmark rate was kept at 0.05 percent and the deposit rate at minus 0.2 percent, both record lows.

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