| | |  Business News | November 2009 
Mexico Peso Hit by Global Bank Fears, Ratings Eyed
 Michael O'Boyle - Reuters
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November 03, 2009
Mexico City - Mexico's peso weakened sharply on Tuesday over concerns about the global banking sector that boosted the U.S. dollar's safe-haven appeal while worries of a possible debt downgrade for Mexico loomed.
The peso lost 0.71 percent to 13.31 per U.S. dollar.
Traders said that tax hikes passed this weekend by Mexico's Congress to curb the country's dependence on waning oil exports may not be enough to stave off a downgrade of the country's debt by Wall Street ratings agencies.
"The tax plan did not come out so smoothly or as the president proposed, and there is some speculation that they will cut the country's debt rating," said Ramon Cordova, a trader at Base Internacional brokerage firm in Monterrey.
"But the peso's losses are more correlated to the correction in stocks. They are finding a new low every day, and this could keep up for the next month," Cordova added.
Investors cut back on riskier assets after poor quarterly results from UBS UBSN.VS and news that UK banks Lloyds (LLOY.L) and Royal Bank of Scotland (RBS.L) would sell hundreds of branches and key businesses to appease regulators.
The IPC stock index rose 0.57 percent to 28,809, lifted by a nearly 1 percent rise in shares of America Movil (AMXL.MX) and a 1.8 percent gain at cement giant Cemex (CMXCPO.MX).
Mexican markets had been closed on Monday due to a holiday, when U.S. stock markets gained.
(Editing by Chizu Nomiyama)
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