| | |  Business News | May 2009 
Peso Rises Most in Six Months
 Valerie Rota - Bloomberg News
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The peso rose the most in more than six months after Health Secretary José Angel Córdova said the swine flu outbreak likely has peaked, bolstering optimism that the economy will begin to recover as businesses reopen.
The peso climbed 4.1 percent to 13.2339 per U.S. dollar, from 13.7786 on May 1. The gain was the biggest since Oct. 13 and the steepest against the dollar on Monday among the world's 16 major currencies.
"The fact that this country will come back to normal in terms of economic activity is a very positive thing" for the peso, said Salvador Orozco, head of fixed-income strategy at Banco Santander in Mexico City.
The swine flu that has caused 26 deaths is in a "declining phase," Córdova said Sunday. While it is too early to estimate the losses caused by the outbreak, some parts of the economy may recover "immediately" and the country could return to normal this week, President Calderón said in a televised interview.
The peso's rally erased last week's 3.2 percent decline, which was spurred by concern the outbreak would deepen the slump in Latin America's second-biggest economy. Mexico halted nonessential state services from May 1 to May 5, and called on businesses to close to curb the spread of the new virus. The country has confirmed 727 cases of the flu, Córdova said Monday.
`MORE CONSTRUCTIVE VIEW'
"We revert to our more constructive view" on the peso, Citigroup Inc. strategists Dirk Willer and Ram Bala Chandran wrote in a report Monday, recommending investors buy the Mexican currency against the dollar. The "worst of swine flu seems to have passed."
Economists project the peso will weaken less this year than they previously expected, according to a central bank survey released Monday. The peso will decline to 13.65 per dollar by the end of 2009, compared with a previous forecast of 14.25, the average estimate of 31 economists surveyed by the central bank between April 21 and April 29 showed.
Banco de México bought $100 million worth of pesos at a local auction Monday.
STOCKS SURGE
The Bolsa Index rose 5.1 percent to 23,014.05 on Monday, the biggest gain in three weeks.
Cemex, the largest cement maker in the Americas, surged 18 percent to 12.13 pesos on a U.S. report that sales of existing homes rose in March, the first back-to-back gain in almost a year. U.S. construction spending also unexpectedly rose, ending a six-month slide.
"Housing sales and construction spending were better than expected," said Gonzalo Fernández, an analyst at Banco Santander in Mexico City. "Cemex could benefit from a potential recovery in both these sectors as the U.S. is its largest market in terms of sales."
Grupo Simec rose the most in over six months, advancing 14 percent to 23.37 pesos. Simec, a unit of Mexico's largest steelmaker, rose after posting better than expected earnings before interest, taxation, depreciation and amortization for the first quarter, Bulltick Casa de Bolsa said. |
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