| | |  Business News | October 2008 
Mexican Peso Rises After US Fed Agrees to Provide $30 Billion
 Valerie Rota - Bloomberg
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 |  | What we are seeing is that there is enough liquidity provided by either the IMF or the Fed for countries that may be facing liquidity shortages in the near term. That is obviously boosting the Mexican peso.
- Alonso Cervera, Credit Suisse |  | | | |
Mexico's peso rallied after the U.S. Federal Reserve said it agreed to provide the Mexican central bank with $30 billion to boost liquidity amid the worst global financial crisis since the Great Depression.
The peso gained as much as 2.1 percent after the Fed said it authorized temporary swap lines with the central banks of Mexico, Brazil, South Korea and Singapore to increase the supply of dollars in emerging markets. The announcement comes as the International Monetary Fund works on a separate program to provide emergency credit to emerging markets.
"What we are seeing is that there is enough liquidity provided by either the IMF or the Fed for countries that may be facing liquidity shortages in the near term," said Alonso Cervera, a Latin America economist with Credit Suisse Group AG in New York. "That is obviously boosting the Mexican peso."
The peso advanced 1.1 percent to 12.9025 per U.S. dollar at 4:31 p.m. New York time, from 13.0405 yesterday. Its gain today pares its decline so far in October to 15 percent.
The swap lines will be in place through April 30, Banco de Mexico said. The resources from the agreement will be available for the bank to provide liquidity to financial institutions in Mexico, it said. The bank said that, at this time, it doesn't need to use the facility.
To contact the reporter on this story: Valerie Rota in Mexico City at vrota1(at)bloomberg.net. |
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