November 21, 2013
Mexico’s peso rose for the first time in three days as a government report showed that Latin America’s second-largest economy expanded more than forecast in the third quarter.
The peso strengthened 0.3 percent to 13.0588 per U.S. dollar at 10:21 a.m. in Mexico City after falling as much as 0.4 percent. It has declined 0.9 percent in five days, the worst performance after Japan’s yen among 16 major currencies.
November 7, 2013
Mexico’s peso rebounded from a three-week low amid speculation that the Federal Reserve will maintain record U.S. monetary stimulus.
The currency appreciated 0.3 percent to 13.1228 per U.S. dollar at 9:44 a.m. in Mexico City, according to data compiled by Bloomberg. The peso closed yesterday at its weakest level since Oct. 9. Yields on benchmark peso bonds maturing in 2024 fell one basis point, or 0.01 percentage point, to 6.15 percent, according to data compiled by Bloomberg.
November 1, 2013
Foreign-exchange strategists are rallying behind planned energy reforms in Mexico designed to attract international investment, forecasting gains in the peso versus every major currency.
Mexico’s peso will climb next year against all 31 of the most-traded currencies tracked by Bloomberg, including a 5.3 percent increase versus the dollar and an 11.2 percent advance against the euro, according to median estimates in analyst surveys. Options betting on one-month implied volatility signal investors are the most confident in the peso since May.
October 18, 2013
Mexico’s central bank could lower borrowing costs by more than expected next week if the country’s currency keeps gaining ground and undercuts the stimulus policymakers delivered to a weak economy with last month’s cut.
The peso has firmed about 1.8 percent this week as feuding U.S. lawmakers hatched a deal to raise the government’s debt ceiling and avert an unprecedented default.
October 8, 2013
The Christian Science Monitor, 10/07/2013
The US government shutdown is rippling across Latin America, seesawing regional economies as markets and analysts take toll of the immediate and long-term impacts from the crisis in Washington.
Mexico and Brazil, the two largest economies in Latin America, saw their currencies swing in opposite directions last week as the US inched closer to a default. The Mexican peso fell to a month-low on concerns over weakened US demand for Mexican goods, while the Brazilian real rallied on speculation that the shutdown would prolong the US Federal Reserve’s stimulus program that has pumped cheap dollars into emerging markets.
July 3, 2013
The Wall Street Journal, 7/2/2013
Bets that the Mexican peso would appreciate were once one of the most popular emerging-market currency trades. Not anymore. The peso plummeted against the dollar in June, as investors fled emerging markets across the board on worries the Federal Reserve could taper its bond-buying stimulus program later this year. Such ultra-loose monetary policy in past years had helped drive investors to seek better returns in higher-yielding assets like the peso. From its 2013 high in May to its low for the year on June 20, the peso weakened 12.8% against the dollar, according to CQG.
The peso’s former popularity ended up hurting it, analysts say. As the emerging-market rout took off in late May and June, many investors had to liquidate their biggest positions, making their hefty bets favoring the peso victims of the risk unwind. “There has been a dramatic clearing of positions in the peso,” Brown Brothers Harriman analysts said in a recent note to clients, highlighting that the peso had been the largest gross long speculative currency futures position.
June 3, 2013
Mexico’s peso could slide even further if convictions mount that the massive monthly U.S. monetary stimulus is nearing an end and lead to an exodus of foreign investors who have piled into Mexican markets. The dizzying slide in the currency, down about 7 percent in the past three weeks, came as investors worried the Federal Reserve might taper off on bond purchases in response to a better U.S. economy and job market.
Although such a move by the Fed should support Mexico and its exporters in the long term since the local economy moves in sync with its northern neighbor, the mere thought of rising market rates in the United States spooked investors who had pushed the peso to its highest in nearly two years in early May. Assets in Mexico, with its close ties to the United States, have been among the most popular investments to leverage cheap loans in developed currencies and the prospect of a Fed exit spurred the worst sell-off in Mexican bonds since late 2010.
April 25, 2013
Fox Business, 4/24/13
Economists say Mexican policy makers have limited options to address those issues at the moment, especially following their decision in March to slash the country’s benchmark lending rate by half a percentage point to 4%, the country’s first rate move since 2009. That’s left the central bank with less room to maneuver at its Thursday meeting.
On the one hand, concern about a slowdown in growth coupled with a 6.7% surge in the peso against the U.S. dollar since the start of the year might suggest that another rate cut is warranted. Such a move might help spur consumer spending and relieve pressure on the exchange rate from foreign investors searching for higher yields.
March 14, 2013
Chicago Tribune, 3/14/2013
Mexico’s peso is scaling new highs amid confidence in the country’s reform push, a likely credit ratings upgrade and profit taking after last week’s interest rate cut, sparking speculation about how far it will rise before authorities act. The peso has gained 2.6 percent since the start of the month, the best performance of the 152 currencies tracked by Thomson Reuters, and broken through key levels of 12.50 per dollar for the first time in 18 months.
The rise has come despite a 50 basis point cut in benchmark interest rates to a record low 4 percent on Friday, which only served to fuel investor optimism about the outlook for Latin America’s No. 2 economy.
March 8, 2013
Mexico’s central bank unexpectedly cut its benchmark interest rate for the first time since 2009 as inflation remains within the target range and growth slows. The peso strengthened.
Banco de Mexico reduced the overnight lending rate by 50 basis points to a record-low 4 percent, a move forecast by seven of 25 analysts in a Bloomberg survey. The rest predicted the rate would stay on hold. Latin America’s second-largest economy was the only nation in the Group of 20 to leave borrowing costs unchanged and refrain from buying bonds to ease monetary conditions since July 2009.