Mexico’s Peso Biggest Drop in a Year

Mexico’s Peso Biggest Drop in a Year

Mexico’s peso tumbled the most in more than a year, prompting the central bank to sell $200 million to help stabilize the currency.

The peso fell 1.8 percent to 15.4726 per dollar, the biggest drop on a closing basis since August 2013, joining a slide of global counterparts. The Mexican currency is now at its lowest level in six years, approaching the record of 15.5892 reached in March 2009.

A report Friday showing strength in the U.S. labor market bolstered speculation the Federal Reserve is closer to raising interest rates, reducing the appeal of emerging-market assets that typically offer higher yields. The central bank’s dollar sales, held under a program started in December, usually are triggered when the peso falls more than 1.5 percent in one trading session. The last time the bank intervened was Dec. 11.

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“I would increase the size of the daily auctions,” Eduardo Suarez, a strategist at Bank of Nova Scotia, said in an e-mail. “This is too broad-based. I don’t think you can stop a move like this.”

Central bank board member Manuel Sanchez said in a speech in Mexico City Friday that weakness in the peso is spurring inflation.

By Isabella Cota

Source: http://www.bloomberg.com/