Mexican Peso Accelerates as Bonds Decline on Plummeting Dollar
Posted by Edward Dy on June 16th, 2008
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Photo Credit: MarkWallace
The Mexican peso increased for a third day as a declining US currency and increasing prices of crude oil spurred investors to look into higher-yielding currencies.
The US currency tumbled versus the majority of its counterparts, while at $139.89 per barrel, Crude oil in New York touched a record.
The Mexican peso surged to its highest level in a week, as it advanced 0.4 percent or 10.3190 to the US dollar on June 13.
Experts believe that as the US dollar softens against the Mexican currency, and the peso-dollar pair may even go as low as 10.25.
Meanwhile, bonds plunged on bets that the central bank on June 20, at its monthly monetary policy meeting would, be increasing the benchmark 7.5 percent lending rate.
“The specter of imported inflation is likely to prompt Banco de Mexico to abandon its stance over the past eight months of holding policy rates steady. The central bank will have little choice but to hike,” according to chief Latin America economist Gray Newman, Morgan Stanley.
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