Mexico Peso Rises on Speculation Europe Rescue May Be Fortified

Bloomberg, 7/25/2012

Mexico’s peso rose for the first time in a week on speculation Europe’s permanent bailout fund will be strengthened, boosting demand for higher-yielding assets.

European Central Bank council member Ewald Nowotny said there are arguments in favor of giving Europe’s rescue fund a banking license, reviving the debate on boosting its capacity.

“The market has taken a turn and is using the peso as a risk proxy for emerging markets,” Ramon Cordova, a currency trader at Banco Base SA in San Pedro Garza Garcia, Mexico, said in a phone interview. “If a headline comes out with a good comment, you’ll see quick drops in the dollar and rises in the peso.”

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