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Mexico Peso Gains Before Federal Reserve Interest-Rate Meeting
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By Catarina Saraiva

Aug. 12 (Bloomberg) -- Mexico’s peso rose as investors await the U.S. Federal Reserve’s interest-rate decision and outlook for the economy that could benefit higher-yielding, emerging-market assets.

The peso rose 0.3 percent to 12.9824 per U.S. dollar at 12:46 p.m. New York time, from 13.0238 yesterday.

Fed policy makers may acknowledge economic growth will be faster than they anticipated, while committing to keep the benchmark interest-rate target near the lowest level on record.

The Federal Open Market Committee is scheduled to issue its statement around 2:15 p.m. in Washington. All 48 analysts surveyed by Bloomberg expect policy makers to keep the benchmark interest-rate target unchanged between zero and 0.25 percent.

“I think the risk is to the upside for the peso against the dollar if the Fed sticks to the status quo,” said Omer Esiner, a senior currency analyst at Travelex Global Business Payments in Washington. “The market will inevitably pare back expectations for rate hikes early next year, and I think that does leave the dollar vulnerable to across-the-board declines.”

Yields on Mexico’s 10 percent bond due December 2024 rose one basis point, or 0.01 percentage point, to 8.43 percent. The bond’s price fell 0.07 centavo to 113.44 centavos per peso, according to Banco Santander SA.

To contact the reporter on this story: Catarina Saraiva in New York at [e-mail].
Last Updated: August 12, 2009 12:56 EDT