BajaNomad - More on the peso slide

More on the peso slide

makana.gabriel - 2-4-2009 at 10:44 AM

Speculation hits fast-falling peso

BY VALERIE ROTA

Bloomberg News

The peso fell to a record low on mounting speculation the economy will contract in 2009 for the first time in eight years as the U.S. recession curbs export demand and trims investment flows.

The peso weakened for a fourth day, its longest losing streak since December.

It pared losses after the central bank bought $400 million worth of pesos at two separate auctions.

The economy "looks pretty bad," said Omar Martín del Campo, a currency trader at Banco Ve por Más S.A. in Mexico City.

"This concern weighs on the peso."

In its first purchase, Banco de México bought $102 million worth of pesos at an average weighted price of 14.5965 pesos per dollar. In the last auction, the central bank bought $298 million worth of pesos at an average weighted price of 14.5986 pesos per dollar, according to results posted on its Web site.

The peso declined 1 percent to 14.5570 per dollar at 2:43 p.m. New York time, compared with 14.4162 Monday. It touched 14.6416, its weakest ever. The peso has tumbled 32 percent over the past six months, the second-worst performance among the world´s major currencies after Brazil´s real.

Banco de México has purchased $16.6 billion worth of pesos since October in an attempt to stem a rout.

The peso fell to a record low for a third straight day after a U.S. government report on Jan. 30 showed the world´s largest economy shrank the most since 1982 last quarter.

The United States buys about 80 percent of Mexican goods sold abroad.

Yields on Mexican peso-denominated bonds advanced for a seventh trading day, pushing benchmark yields to a one-month high, on speculation the weakening peso will increase prices of imported goods and fan inflation.

Bajahowodd - 2-4-2009 at 11:21 AM

What doesn't make sense to me is the relative strength of the dollar, given the awful situation we face with deficits and debt. Just maybe the slide of the peso is caused in part by an artificial support for the dollar. Time will tell.

Baja&Back - 2-4-2009 at 02:47 PM

Somebody PLEASE explain to me why the Mexican Peso is diving when it's the American economy that's mismanaged & ****ed up??? To my mind, the Dollar should be tanked against other currencies.
Joo got some 'splainin' to do, Loocy!
:?:

Bajahowodd - 2-4-2009 at 03:37 PM

Mostly because the Chinese have been holding the dollars we use to buy their stuff, and also buying our debt. They don't buy Mexican debt to any extent. It will hit the fan if they stop buying, or worse yet start selling. Their economy is tanking, too, so it's a matter of how patient they are and how good a sense of humor they have. Actually, if for some reason, they believe the our economy is not going to come back to where it was, the dollar will be toast. That would probably strengthen the peso, but by then the world will be in crisis.

[Edited on 2-4-2009 by Bajahowodd]

1-800-GET MONEY

Dave - 2-4-2009 at 04:55 PM

Yesterday, the U.S. extended Mexico a 30 billion credit line to prop up the peso.

I'll bet they use every dime. :rolleyes:

It should be..

Sharksbaja - 2-4-2009 at 05:02 PM

1-800-GETFREEMONEY

Where's the end of that line anyhoo? :rolleyes:

Screw that

Dave - 2-4-2009 at 05:08 PM

Quote:

Originally posted by Sharksbaja
Where's the end of that line anyhoo? :rolleyes:

Where does one get in line?

k-rico - 2-4-2009 at 05:14 PM

Quote:

Originally posted by Sharksbaja
1-800-GETFREEMONEY

Where's the end of that line anyhoo? :rolleyes:

Zimbabwe

msteve1014 - 2-4-2009 at 05:33 PM

There is no end to that line. The U.S. just keeps handing it out like it was only paper. :mad:

Woooosh - 2-4-2009 at 06:04 PM

Quote:

Originally posted by Baja&Back
Somebody PLEASE explain to me why the Mexican Peso is diving when it's the American economy that's mismanaged & ****ed up??? To my mind, the Dollar should be tanked against other currencies.
Joo got some 'splainin' to do, Loocy!
:?:

As bad as the huge waves are in the usa economy- the rest of world is getting ready for an economic tsunami. The rest of the world loves to hate us until times like now- when they have to beg us not be protectionists. Now they are screaming for us to support the "world economy".

In the end the USA and UK will prevail because people know it is our nature. The EU isn't that strong- and they keep admitting weaker members. Once that armor is cracked- it's gonna fall hard- all of them. They know it. They are scared to death- especially with some Unionized Brits on strike to prevent Paki foreigners from taking their jobs- very protectionist. The best option for the UK is to lash itself firmly to the USA and us both be protectinist against the EU- what do they make?

China has more power than anyone understands. Mexico and Canada will suffer less- because it's the neighbor of the USA. Not becuase they deservie it- but becasue they beneift from their locations. JMHO