Videgaray Says No Need to Intervene as Mexico’s Peso Weaken

January 24, 2014

luis videgarayBloomberg, 01/24/2014

Mexico’s Finance Minister Luis Videgaray said there is no need to support the peso, which has fallen to its weakest in 18 months, because the market remains sufficiently liquid.

“The Mexican peso market is, fortunately, highly liquid and at the moment doesn’t require any support,” Videgaray said in an interview at the World Economic Forum in Davos, Switzerland. “We have a very liquid market and we don’t see the need to inject liquidity, to intervene.”

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Mexico peso hits 7-week high on energy reform optimism

December 9, 2013

peso by Guanatos GwynReuters, 12/9/2013

Mexico’s peso firmed sharply on Monday to its strongest level in seven weeks after lawmakers unveiled a more audacious than expected bill to open up state-run energy industries to greater private investment.

The peso gained 1 percent 12.8020 per dollar, its strongest level since mid-October.

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Mexico annual inflation rate picks up pace in November

December 9, 2013

Photo by Flickr user Aleiex

Reuters, 12/9/2013

Mexican inflation picked up less than expected in November on a spike in fresh food and electricity costs and muted underlying price pressures boded for steady borrowing costs through next year.

Inflation in the 12 months through November rose to 3.62 percent, the national statistics agency said on Monday.

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Mexico’s Currency Advances as Economy Expands More Than Forecast

November 21, 2013

taxes -- counting coinsBloomberg, 11/21/2013

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.

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Mexican Peso Rallies on Fed as Broader Energy Reform Proposed

November 7, 2013

currency - coinsBloomberg, 11/06/2013

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.

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Mexico Wooing Energy Cash Puts Peso on No Lose Path: Currencies

November 1, 2013

Photo by Flickr user Aleiex

Bloomberg, 11/1/2013

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.

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Mexico peso rally could spur bigger interest rate cut

October 18, 2013

pesos2Reuters, 10/17/2013

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.

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Mexico swoons and Brazil rallies in response to US shutdown

October 8, 2013

Flag-Pins-Mexico-BrazilThe 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.

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Mexican Peso No Longer Mr. Popular

July 3, 2013

50 PesosThe 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.

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Mexico peso peers over precipice to much steeper fall

June 3, 2013

Share market prices shown on anReuters, 6/3/2013

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.

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