Mexico’s Peso Gains for First Time in Four Days on U.S. Stocks
Share Business ExchangeTwitterFacebook| Email | Print | A A A
By Tal Barak Harif
Dec. 9 (Bloomberg) -- Mexico’s peso rose for the first time in four days after gains in U.S. stocks prompted investors to buy higher-yielding, emerging-market assets.
The currency strengthened 0.2 percent to 12.8981 per U.S. dollar by 5 p.m. New York time, from 12.9247 yesterday.
The peso climbed after the Standard & Poor’s 500 Index added 0.4 percent as concern credit downgrades will spread eased. Spain had the outlook on its debt lowered by Standard & Poor’s, one day after Greece’s government bonds tumbled following a downgrade by Fitch Ratings.
“The peso is strengthening on the back of stronger U.S. equities and a general view of improved global conditions that are pushing currencies in emerging markets,” said Nick Chamie, head of emerging-market research at RBC Capital Markets in Toronto.
The yield on Mexico’s benchmark bond fell one basis point, or 0.01 percentage point, to 8.13 percent. The price of the 10 percent security due in December 2024 rose 0.10 centavo to 116.17 centavos per peso, according to Banco Santander SA.
The peso fell earlier after President Felipe Calderon nominated Agustin Carstens as the country’s central bank governor, replacing Guillermo Ortiz, whose second six-year term expires at the end of the year. Social Development Minister Ernesto Cordero will be Finance Minister.
‘Right Knowledge’
Cordero “isn’t perceived as having the right knowledge,” said Francisco Diez, director of foreign-exchange trading at RBC Capital Markets in New York. “The optimal scenario would have been for Carstens to stay in the finance ministry and for Ortiz to be replaced by Tames.”
Alonso Garcia Tames, Mexico’s public works development bank chief executive officer, was one of the candidates that investors, economists and the media speculated would replace Ortiz.
Banco de Mexico is forecast to raise borrowing costs next year to offset the inflationary effects of higher taxes approved as part of the 2010 budget as well as expected increases in gasoline and electricity prices.
“Markets would prefer Carstens stay as finance minister, as the next year will be very challenging in terms of budgetary and overall economic policy,” Win Thin, senior currency strategist at Brown Brothers Harriman & Co. in New York, wrote in a report. “Such a move is not a good one for the peso.”
To contact the reporter on this story: Tal Barak Harif in New York at tbarak@bloomberg.net
Last Updated: December 9, 2009 18:14 EST
