Mexico’s Peso Declines to 2-Week Low on Rate Cut Expectations
Mexico’s peso fell to a two-week low on expectations that the coutnry’s central bank this week will cut interest rates for a third time in three months.
The peso has declined 1.6 percent in five days ahead of the Bank of Mexico’s Oct. 14 policy meeting. The bank has cut the overnight lending rate twice since August to 9.25 percent, a half percentage point from a 29-month high of 9.75 percent. Rising yields in the U.S. are also contributing to the peso’s weakness, said Suhas Ketkar at RBS Greenwich Capital Markets.
“The peso is falling on expectations of rate cuts and of a declining yield differential with the U.S.,'’ said Ketkar, a currency strategist at RBS. “I have been a little surprised that it has held up as long as it has.'’
The peso fell 0.7 percent to 10.8900 per dollar at 11:32 a.m. New York time from 10.8153 late yesterday, its weakest since trading at 10.8927 on Sept. 28. The decline pared its gain in 2005 to 2.4 percent, the third-best performance against the dollar of the 16 major currencies. It’s the worst performer in the last five days.
The Mexican central bank’s two rate cuts are the first steps in reversing 12 interest-rate increases through March that slowed economic growth and inflation in Latin America’s largest economy.
The yield on the U.S. 10-year Treasury note, a benchmark for global lending, last week reached 4.44 percent, a six-month high, and today traded at 4.40 percent, a 0.38 percentage point increase since Aug. 31.
On the Chicago Mercantile Exchange, the peso future contract for December delivery fell 0.68 percent to 9.0900 cents from 9.1525 cents yesterday.
Source: bloomberg.com
Mexicos Peso Falls to Eight-Week Low Amid Inflation Concerns
Mexicos peso dropped to an eight- week low against the dollar and local-currency bonds fell on expectations inflation quickened last month.
The peso fell as much as 0.6 percent today before a report that is expected to show consumer prices rose 0.44 percent last month, the biggest increase in seven months, according to the median forecast of 16 economists in a Bloomberg survey. Accelerating inflation decreases the value of peso-denominated assets.
The inflation number today is going to look pretty bad, said Raul Rodriguez, head of economic analysis at Mexico City- based
Mexico's Inflation Rate Drops to Record Low in August (Update1)
Mexico's annual inflation rate fell to the lowest on record in August, adding to expectations that the central bank will cut the benchmark lending rate for a second straight month.
Inflation in the 12 months through August slowed to 3.95 percent, the lowest rate since the central bank began keeping records in 1969, from 4.47 percent in July. The monthly inflation rate dropped to 0.12 percent from 0.39 percent in July as the cost of cars and vegetables such as tomatoes and avocados fell.
``Inflation has been declining consistently and
Mexico's Peso Rises to 28-Month High on Interest Rate Outlook
Mexico's peso rose to its strongest against the dollar since July 2003 on speculation that the yield advantage of the country's securities relative to the U.S. will remain high, helping to attract increased investment.
Interest-rate reductions by MexicO'S central bank probably will be limited in the months ahead by the U.S. Federal Reserve's actions and will help keep Mexico's bonds and peso attractive, said Lawrence Goodman, head of emerging markets strategy with Bank of America.
``A Fed that is likely to tighten rates will ultimately place a limit on how
Mexico Fixed-Rate Bond Yields to Rise on Inflation, Moreno Says
Mexico's fixed-rate peso bond yields may rise in 2006 as the inflation rate climbs from a record low, said Salvador Moreno, chief economist at ING Groep NV's Mexican unit.
The yield on fixed-rate bonds may rise as much as 30 basis points, or 0.3 percentage point, as higher-than-expected consumer price increases drive down already ``tight'' valuations, Moreno said. The annual inflation rate may climb as high as 3.9 percent in January, more than the 3.5 percent expected by many fund managers, he said.
``There's a risk that inflation expectations rise
Currency Strategists: BNP Says Mexico's Peso May Fall
The Mexican peso, up 4.5 percent versus the dollar this year, will drop in 2006 as the central bank cuts its benchmark interest rate amid slowing inflation, said Rafael de la Fuente, chief economist for Latin America at BNP Paribas SA.
The peso has dropped 1.4 percent since the central bank lowered its key rate by a greater-than-expected half a percentage point to 8.25 percent on Dec. 9, the fifth reduction since August. Mexico's currency may also decline on concern lower rates will reduce the yield advantage of domestic bonds.
``We still
Mexico 1-month T-bill yield rises to 7.02 pct
The yield on Mexicos benchmark 28-day Cetes, or T-bills, edged up 1 basis point to 7.02 percent on Tuesday amid expectations of rising U.S. interest rates.
Longer-term Cetes yields ticked up from last week at a central bank auction, along with rates on Mexicos 3-year and 7-year peso from when they were last auctioned on May 16.
The yield on the three-month bill rose to 7.36 percent from 7.28 percent last week, while the yield on the six-month yield rose to 7.63 percent from 7.50 percent.
The 3-year peso bond rose to a yield of 8.50
Mexico Lowers Benchmark Rate to 20-Month Low of 7%
Mexicos central bank unexpectedly reduced its benchmark overnight rate for a ninth straight month to bolster growth in Latin Americas second-biggest economy. Policy makers said they see no room for further reductions in the foreseeable future.
Banco de Mexico cut its overnight target rate a quarter- percentage point to a 20-month low of 7 percent, bringing it down 2.75 percentage points from 9.75 percent in August. Twelve of 21 economists surveyed by Bloomberg had forecast the central bank would leave the rate unchanged at todays meeting.
The rate cut drove stocks up
Mexico 28-day T-bill yield down to 8.42 pct
The yield on Mexico's benchmark 28-day Cetes, or T-bills, shed 8 basis points to 8.42 percent on Tuesday on expectations the central bank will push interest rates lower this week.
Longer-term rates also fell at the central bank auction.
The fall in interest rates was slightly smaller than market expectations. A Reuters survey of Cetes dealers had forecast the rate on the benchmark one-month paper would drop 10 basis points to 8.40 percent.
The yield on the 10-year peso denominated bond fell to 8.45 percent from 8.73 percent when it was last auctioned on Nov.
UPDATE 1-Mexico 28-day T-bill yield edges down to 7.98 pct
The yield on Mexico's benchmark Cetes, or T-bills, edged down for the 23rd straight week on Tuesday amid investor expectations that the central bank will push interest rates lower again this month.
The rate on 28-day paper fell four basis points to 7.98 percent while the rates on three-month and six-month paper also fell.
An earlier Reuters survey of Cetes dealers had forecast the 28-day Cetes rate would fall two basis points to 8.00 percent while longer-term T-bill yields would fall slightly or hold steady.
The yield on the 10-year peso denominated bond
Mexico Sells Warrants to Swap $2.5 Billion of Bonds
Mexico sold securities that allow investors to swap about $2.5 billion of the nation's dollar- denominated bonds for peso debt next year, a person familiar with the offering said.
Investors paid $65 million for warrants that can be turned in along with Mexican dollar bonds that mature between 2007 and 2033 in exchange for peso securities due in 2011, 2014 and 2024, the person said.
The sale is part of a government effort to shift more of its financing to the domestic market, helping reduce its vulnerability to declines in the
