| | |  Business News | August 2008 
Mexican Peso Sinks After U.S. Data; Stocks Down
 Michael O'Boyle - Reuters
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Mexico City - Mexico's peso weakened sharply on Friday after weak U.S. personal income data stoked worries about Mexican exports and amid growing expectations the country's central bank will not further hike interest rates.
The peso MEX01 was off for the second day in a row, losing 0.53 percent to 10.295 per dollar, while the IPC stock index .MXX slipped 0.51 percent to 26,309 points.
A government report showed U.S. personal income tumbled unexpectedly in July and spending slowed as the effects of government financial stimulus wore off.
"That spending number suggests there would be some contagion effects with respect to Mexico," said Dustin Reid, a foreign exchange strategist at ABN Amro in Chicago.
Mexico sends around 80 percent of its exports to the United States and the direction of its economy is closely tied to the fortunes of its northern neighbor.
Traders also said investors were ruling out further interest rate hikes in Mexico after central bank chief Guillermo Ortiz said on Thursday that the country is seeing an end to a recent inflation spike caused by surging international food and energy prices.
The central bank has said that slowing growth in Mexico should cool inflationary pressures.
In debt trading, bonds gave up some of their gains from Thursday when yields fell to their lowest levels since early June as Ortiz's comments eased expectations of further interest rate hikes and a prolonged bout of inflation.
The government's benchmark 10-year peso bond fell 0.123 of a point in price to 95.373, pushing its yield up 2 basis points to 8.47 percent.
In the equites market, traders said Mexican stocks were following U.S. markets down and were also hurt as lower metals prices pulled miners lower.
Shares of top retailer Wal-Mart de Mexico (WALMEXV.MX: Quote, Profile, Research, Stock Buzz) lost 2.31 percent to 37.25 pesos.
Miner Grupo Mexico (GMEXICOB.MX), the country's biggest copper producer, gave up 1.52 percent to 16.85 pesos as copper prices slipped on worries that demand from China could slacken.
Offsetting losses were gains at Cemex (CMXCPO.MX), the world's No. 3 cement maker, which added 0.58 percent to 20.70 pesos, while its New York traded stock (CX.N) slipped 0.05 percent to $20.12.
(Editing by Leslie Adler) |
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