Mexico’s peso declined to its lowest level in a year as U.S. manufacturing growth added to speculation that the Federal Reserve will curtail a stimulus program that has supported emerging-market assets.
The peso depreciated 0.7 percent to 13.4256 per U.S. dollar at 9:10 a.m. in Mexico City, the weakest on a closing basis since July 2012.
Yields on peso bonds maturing in 2024 increased four basis points, or 0.04 percentage point, to 6.45 percent, according to data compiled by Bloomberg.
“This is going to continue until the Fed gives a clear direction,” Eduardo Rodriguez, a trader at Casa de Bolsa Finamex SAB, said in a telephone interview from Guadalajara, Mexico.
“The market is now interpreting that the Fed will decide to reduce stimulus in the short term.”
The peso fell after the Institute for Supply Management reported that its index of U.S. manufacturing increased to 55.7 in August from 55.4 in the prior month.
A reading of 50 is the dividing line between expansion and contraction. Mexico sends about 80 percent of its exports to its northern neighbor.
bloomberg.com
The peso depreciated 0.7 percent to 13.4256 per U.S. dollar at 9:10 a.m. in Mexico City, the weakest on a closing basis since July 2012.
Yields on peso bonds maturing in 2024 increased four basis points, or 0.04 percentage point, to 6.45 percent, according to data compiled by Bloomberg.
“This is going to continue until the Fed gives a clear direction,” Eduardo Rodriguez, a trader at Casa de Bolsa Finamex SAB, said in a telephone interview from Guadalajara, Mexico.
“The market is now interpreting that the Fed will decide to reduce stimulus in the short term.”
The peso fell after the Institute for Supply Management reported that its index of U.S. manufacturing increased to 55.7 in August from 55.4 in the prior month.
A reading of 50 is the dividing line between expansion and contraction. Mexico sends about 80 percent of its exports to its northern neighbor.
bloomberg.com
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