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 Business News | April 2007 
Peso Hits Six-Week High on US Housing Data
 El Universal
| | Mexican stocks jumped on Tuesday as a weekend acquisition bid by Mexican tycoon Carlos Slim charmed investors for a second straight day, while the peso firmed. |
The peso rose to a six-week high after a report showed sales of previously owned homes unexpectedly rose in the U.S., buoying optimism the world´s biggest economy will increase purchases of Mexican goods.
The jump in housing sales, a sign the U.S. economic expansion may hold up, helped spur a rally in global stocks as investors grew more confident about riskier, emerging-market assets such as Mexican assets.
"Mexico´s peso is very dependent on the global backdrop," said Matthew Festa, an emerging market economist in New York at research firm 4Cast Inc.
"The surge in stocks today is a proxy of the increase in risk appetite that we´re seeing."
The peso gained 0.4 percent to 10.9775 per dollar by mid afternoon Tuesday, its strongest since reaching 10.9524 on Feb. 22.
The rise in the peso was the third-best performance among the 16 most-traded currencies against the dollar. The South African rand and Brazilian real gained more.
An index that measures pending U.S. homes sales rose 0.7 percent in February, the National Association of Realtors said today. The U.S. is the biggest buyer of Mexican exports.
BOND MARKET RALLY
The yield on Mexico´s benchmark 10-year maturity fell to its lowest since the bond was issued in January.
A rally in Mexican bonds over the past two weeks has been spurred by expectations legislators will this year approve tax and energy laws boosting growth. Last week, the Senate passed a bill aimed at trimming government spending on retiring workers.
The yield on Mexico´s 7.25 percent bond due in December 2016 fell almost 3 basis points, or 0.03 percentage point, to 7.52 percent. The price, which moves inversely to the yield, rose 0.19 centavo to 98.13 centavos per peso, according to Santander Central Hispano SA.
Mexican bonds rallied even as a central bank survey yesterday showed economists raised their inflation forecast for 2007 for a fourth consecutive month.
Economists who cover Mexico raised their estimate after a report showed the country´s annual inflation in the first 15 days of March quickened to 4.2 percent, the fastest pace since the first half of October.
Inflation will be 3.68 percent this year, higher than the 3.64 percent forecast in the previous survey, according to the average of 32 economists polled by Bloomberg this month.
"The market isn´t panicking on this," Festa said.
"The long-term forecast remains stable."
Mexico Stocks Jump, Driven by Slim's Telmex
Reuters
Mexico City - Mexican stocks jumped on Tuesday as a weekend acquisition bid by Mexican tycoon Carlos Slim charmed investors for a second straight day, while the peso firmed.
The benchmark IPC stock index climbed 0.87 percent to 29,426 points, edging down from a lifetime high set earlier in the session at 29,516 points.
The Mexican peso firmed 0.38 percent to 10.9799 per dollar, as signs of an easing of tensions between Iran and Britain boosted investors' appetite for risk.
Shares of Telmex, the dominant fixed-line telephone service provider in Mexico, were up 2.1 percent to 19.22 pesos, while its New York-traded shares gained 2.5 percent to $34.97.
Slim's telecom flagships America Movil and Telmex are seeking to buy a one-third stake in Olimpia, a holding company for Telecom Italia, Europe's No. 5 telecom group.
America Movil, which is Latin America's largest cellphone operator and is controlled by Slim, was up 0.5 percent at 27.76 pesos after surging more than 4 percent on Monday. Its New York-traded shares were up 1 percent at $50.60.
Companies also were boosted by signs of a stabilizing U.S. housing market. A report showed the U.S. pending home sales index at a stronger-than-expected 109.3 in February, suggesting that the worst of the U.S. housing slump may be over.
Mexico is tightly linked to the economy of the United States, where it sends nearly 90 percent of its exports.
Shares of Cemex, the world's No. 3 maker of cement and a top supplier of the U.S. construction industry, rose 0.7 percent to 36.64 pesos. Its New York-traded shares were up 1.3 percent at $33.28.
Miner Grupo Mexico, Mexico's leading producer of copper, jumped 1.7 percent to 52.80 pesos as copper prices climbed more than 3 percent in London. |
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