Mexican peso weakens to record low
Friday February 20, 1:18 pm ET

Mexico's peso weakens to record 14.89 to the US dollar on interest rate cut


MEXICO CITY (AP) -- Mexico's peso has weakened to a record 14.89 to the U.S. dollar after the central bank cut interest rates less than expected.

The bank on Friday lowered its benchmark rate by 25 basis points to 7.50. It was the second time since January that the bank slashed rates to boost Mexico's sagging economy.

The peso has lost about 30 percent of its value against the dollar since August, boosting the costs of imports.

Mexico sends 80 percent of its exports to the United States and it has been pummeled by the U.S. downturn. Officials say the economy could be headed for a recession.

Officials say the economy could be headed for a recession.
..
quite astute of them over there.

All right, dollar should go a long ways down there. Just wear something to prevent your head from being lopped off. Get one of those big collars with spikes on it.


Mexico’s Peso Tumbles to Record Low as U.S. Economy Shrinks

By Andrea Jaramillo

Feb. 27 (Bloomberg) -- Mexico’s peso dropped to a record low for a second consecutive day on concern the shrinking U.S. economy will trim dollar flows from exports, remittances, tourism and foreign direct investment.

“Negative U.S. data is hitting the peso,” said Francisco Diez, director of foreign-exchange trading at RBC Capital Markets in New York. The Mexican currency “will continue following the U.S,” he said.

The peso slid 0.8 percent to 15.0831 per U.S. dollar at 11:34 a.m. New York time, from 14.9674 yesterday. It earlier touched a record low of 15.1678. The Mexican peso is down 33 percent in the past six months, the biggest decline among the world’s major currencies.

The peso today joined a slide in U.S. stocks and Latin American currencies including the Brazilian real and the Colombian peso. A U.S. government report showed that the world’s biggest economy contracted 6.2 percent in the fourth quarter, faster than previously estimated and the most since 1982. The U.S. buys about 80 percent of Mexico’s exports.

Investors reached stop-levels yesterday when the peso weakened below 15 for the first time, leading them to sell the currency, Diez said. The “too strong, too fast” movements in the peso will likely ease in the next few weeks, he said.

Banco de Mexico has spent more than $18 billion of foreign reserves since October to stem the peso’s decline. It last bought pesos directly from banks on Feb. 23, adding to the $1.2 billion worth of the currency it purchased earlier this month through direct interventions. The bank on March 3 will announce the amount of pesos it bought at the beginning of this week.

Mexico’s central bank has “the resources and access to additional lines of defense to keep” the peso below 15.50, Deutsche Bank AG analysts Guilherme Marone and Andres Orlandi wrote in a report yesterday. The peso likely will trade between 14.50 and 15.50 over the next month, according to the report.

The yield on the government’s benchmark 10 percent bonds due in 2024 rose for the first time in four days, increasing 13 basis points to 8.84 percent. The bond’s price fell 1.21 centavo to 109.80 centavos per peso, according to Banco Santander SA.

The yield has risen 61 basis points since Feb. 19, a day before the central bank reduced its benchmark interest rate by a quarter point, less than economists forecast, to 7.5 percent.

To contact the reporter on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net

Last Updated: February 27, 2009 11:41 EST

The MX peso has turned around smartly in the past few days. Did anyone here see a reason?

Wachovia says: Speculation that the worst of the U.S. recession may be over as well as daily Mexican central bank intervention has helped the peso gain round relative to the USD. http://www.fxstreet.com/fundamental/mark....

Quote:

Mexican central bank intervention has helped the peso gain round relative to the USD.

What insanity are we living in? If the MXN central bank is selling dollars that they know will soon be worth less then perhaps this is justifiable. Other than that, propping up the peso has always been a loosing proposition.