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 Business News | September 2007 
Mexican Peso Falls the Most in Three Weeks After U.S. Cuts Jobs
 Valerie Rota - Bloomberg
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 |  | Investors are super freaked with the non-farm payrolls number.
- Benito Berber, HSBC Securities |  | |
Mexico's peso and local bonds fell after a report showing U.S. employers cut jobs last month for the first time in four years added to expectations that demand for Mexican exports will slow.
The jobs report "was a very bad number," said Bertrand Delgado, a Latin America currency analyst at IDEAglobal Inc. in New York. "It creates a cloud of concern about slower growth in the coming quarters."
The peso weakened 0.7 percent to 11.1308 per dollar at 12:57 p.m. in New York after earlier falling as much as 0.8 percent, the biggest decline since Aug. 16. The drop in the peso was the second-largest against the dollar among the most-traded Latin American currencies. Only Brazil's real fell more.
U.S. employers cut 4,000 workers from payrolls in August, the Labor Department said. Economists expected a creation of 100,000 new jobs, according to the median of 88 estimates in a Bloomberg survey. Mexico sends more exports to the U.S. than any other Latin American country. Last year, Mexican exports to the U.S. made up about one-fourth of the country's gross domestic product.
Mexico's 7.5 percent bond due December 2027 led declines in the local fixed-income market. The yield on the 20-year security rose 4 basis points, or 0.04 percentage point, to 7.89 percent. The price, which moves inversely to the yield, fell 0.38 centavo to 96.09 centavos per peso, according to Banco Santander Central Hispano SA.
Mexican bonds failed to rally after a report showed annual inflation slowed more-than-expected last month.
Non-Payroll Worries
Investors are "super freaked with the non-farm payrolls number," said Benito Berber, a Latin America strategist at HSBC Securities USA Inc in New York.
Annual inflation slowed to 4.03 percent in August from 4.14 percent in July, the central bank said today. Economists expected inflation of 4.05 percent, according to the median of 11 estimates in a Bloomberg survey.
Annual inflation has hovered near the upper end of the bank's 2 percent to 4 percent target range during the past year. Central bankers said in July that inflation of between 3.75 percent and 4.25 percent in the third quarter would slow to between 3.25 percent and 3.75 percent in the fourth quarter.
"There was no surprise in today's report," Berber said.
To contact the reporter on this story: Valerie Rota in Mexico City at vrota1@bloomberg.net. |
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