| | |  Business News | March 2009 
Mexico Peso, Stocks Surge on US Rally
 Michael O'Boyle - Reuters
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| | Peso soars 2.37 percent in third session of gains. | |
Mexico City - Mexico's peso soared on Thursday for the third straight session after U.S. retail sales fell less than expected, while stocks made their biggest one-day jump in almost four months.
Also boosting stocks and the peso was word that Mexico's private pension funds would sign an agreement next week to buy only local investments.
The peso (MEX01) strengthened 2.37 percent to 14.74 per dollar at the central bank's final reference.
The IPC stock index .MXX also posted its third session of gains, closing up 6.04 percent at 18,864.87 points, its biggest one-day percentage gain since Nov. 24.
A U.S. government report on Thursday showed sales at U.S. retailers fell by an unexpectedly small margin in February, suggesting some stabilization in consumer spending.
That bodes well for Mexico's exports, around 80 percent of which are shipped to its northern neighbor.
Traders also said local assets gained as a string of statements from major U.S. banks about their profitability in early 2009 eased worries about the health of American banks.
"Markets are realizing that we could be near the bottom, investors are looking at Mexico again, and it looks cheap," said Ramon Cordova, a currency trader at Base Internacional brokerage in Monterrey.
Providing further support to the Mexican currency, the central bank auctioned $100 million as part of a new regime began this week.
UBS economist Gabriel Casillas wrote in a report that the central bank could tap a $30 billion currency swap line from the U.S. Federal Reserve "at any time soon" to provide further liquidity in the foreign exchange market.
The peso has lost around a third of its value against the dollar since August amid growing concerns that the U.S. downturn is driving Mexico into a deep recession.
In debt trading, the government's 10-year peso bond (MX10YT=RR) jumped 3.086 points, pushing its yield down 47 basis points to 8.32.
Traders said the peso's solid gains this week meant it was more likely the central bank will keep cutting interest rates to boost the economy.
On the stock market, shares in Inbursa (GFINBURO.MX), the financial group controlled by Mexican billionaire Carlos Slim, surged 23.97 percent to 35.95 pesos.
In the retail sector, shares in top retailer Walmex (WALMEXV.MX) jumped 3.43 percent to 33.47 pesos while the stock of home appliance dealer Elektra (ELEKTRA.MX) climbed 20.98 percent to 364.28 pesos.
In a report on Thursday, Deutsche Bank analyst Guilherme Paiva wrote that Mexican consumers have a relatively low level of debt compared to those in many other countries, which could help both banks and retailers.
(Editing by Jonathan Oatis) |
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