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 Business News | September 2007 
Mexico's Currency Strengthens on Expected Approval of Tax Plan
 Valerie Rota - Bloomberg
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Mexico's peso strengthened on expectations President Felipe Calderon's tax bill may be approved by legislators this week, allowing the government to increase spending on investment projects during his term.
Yields on Mexican peso-denominated bonds fell for a third day. Legislators have been debating the bill since June and are set to agree on a preliminary draft of the tax plan, enabling Congress to approve it as early as the end of this week, said Hector Larios, head of Calderon's National Action Party in the lower house, in an interview yesterday.
"Any news surrounding progress on the tax reform front will help buoy the peso," said Luis Flores, an economist at IXE Grupo Financiero SA in Mexico City.
Mexico's currency rose 0.1 percent to 11.0178 per dollar at 4:35 p.m. in New York. Trading in Mexico's peso was less than usual today because U.S. markets are closed for the Labor Day holiday, Flores said.
Calderon's tax bill seeks to reduce Mexico's dependence on income from oil exports. He wants the bill approved before Sept. 8, when the government must submit next year's budget plan.
The bill would increase tax collection by 1.5 percent of gross domestic product in 2008, and by as much as 2.5 percent by 2012, Larios said.
The yield on Mexico's 10 percent bond due December 2024, the country's most-traded peso security, fell 5 basis points, or 0.05 percentage point, to 7.8 percent. The price rose 0.54 centavo to 120.79 centavos per peso, according to Santander Central Hispano SA. A bond's price moves inversely to its yield.
To contact the reporter on this story: Valerie Rota in Mexico City at vrota1@bloomberg.net. |
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