| | |  Business News | September 2008 
Mexico's Currency Falls to Six-Month Low After Lehman Collapse
 Valerie Rota - Bloomberg
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| | A Lehman Brothers employee leaves the Wall Street headquarters with his belongings. (Reuters) | | |
Mexico's peso fell to a six-month low after Lehman Brothers Holdings Inc. filed for bankruptcy, reducing demand for higher-yielding, emerging-market assets.
The peso was the second-biggest loser against the dollar after Brazil's real among the six most-traded currencies in Latin America. Lehman, once the fourth-largest U.S. investment bank, listed more than $613 billion of debt after failing to find a buyer, and Merrill Lynch & Co. agreed to be sold to Bank of America Corp. for $50 billion.
"There's a lot of angst because of the U.S. financial market situation," said Sergio Gutierrez, who oversees 18 billion pesos ($1.7 billion) in assets at Investrust SA in Mexico City.
The peso fell 1.4 percent to 10.7424 per dollar at 5 p.m. New York time, from 10.5945 on Sept. 12. It touched 10.7735, its weakest level since March 18.
A drop in the price of oil, which funds more than a third of the Mexican government's revenue, added to losses in the peso, said Pablo Septien, who oversees $400 million in assets at Finaccess SA in Mexico City. Crude oil for October delivery fell to a seven-month low, dropping as much as 7.1 percent to $94 a barrel on the New York Mercantile Exchange.
Mexican peso-denominated bonds of all maturities fell. The yield on the benchmark security due in 2024 has risen 10 basis points, or 0.1 percentage point, since touching a three-month low of 8.42 percent on Sept. 2. Yields may extend their increase as inflation accelerates and demand for riskier assets wanes, Septien said.
"On top of inflation, we're facing risk aversion," Septien said. "I would be cautious."
The yield on Mexico's 10 percent bond maturing in December 2024 increased 2 basis points to 8.53 percent today. The price fell 0.23 centavo to 112.86 centavos per peso, according to Banco Santander SA.
To contact the reporter on this story: Valerie Rota in Mexico City at vrota1(at)bloomberg.net. |
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