| | |  Business News | July 2009 
Mexican Currency Drops as Remittances Slump for an Eighth Month
 Valerie Rota - Bloomberg
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July 30, 2009
 |  | The peso is very sensitive to remittance data. Investors use remittance data to measure what kind of impact the U.S. slump continues to have on our economy.
- Mario Copca, Metanalisis SA |  | | |
Mexico’s peso fell after the central bank said remittances declined in June for an eighth straight month, reducing dollar flows into the Latin American country.
The currency weakened 0.4 percent to 13.2539 per U.S. dollar at 5 p.m. New York time, from 13.2013 yesterday.
Banco de Mexico today said remittances, the country’s second-biggest source of dollar flows, declined 15.1 percent in June from a year earlier. The central bank also said Mexico’s economy will shrink between 6.5 percent and 7.5 percent this year, more than the range of between 3.8 percent and 4.8 percent that it previously predicted.
“The peso is very sensitive to remittance data,” said Mario Copca, a currency strategist at Metanalisis SA in Mexico City. “Investors use remittance data to measure what kind of impact the U.S. slump continues to have on our economy.”
Mexico sends 80 percent of its exports to the U.S., which is also the biggest source of revenue from money transfers from workers abroad, tourism and foreign direct investment.
U.S. stock losses and a slump in oil prices also eroded investor demand for emerging-market assets, said Omar Martin del Campo, a currency trader at Banco Ve Por Mas SA.
The Standard & Poor’s 500 Index slid 0.5 percent. Crude oil, Mexico’s biggest export, tumbled 5.8 percent.
“Equity markets aren’t helping the peso,” Mexico City- based Martin del Campo said. “Neither is lower oil.”
Yields on Mexico’s 10 percent bond due December 2024 rose two basis points, or 0.02 percentage point, to 8.41 percent. The bond’s price fell 0.2 centavo to 113.64 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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