The peso jumped as much as 0.6 percent today, extending a 6.1 percent rally that has made it the best performer among the 16 most-traded currencies in the world this year. The yield on the country’s benchmark peso bonds due in 2024 fell five basis points to a one-month low of 7.92 percent on speculation Citigroup’s move will prompt investors who use the index as a benchmark to buy Mexican securities.
“This adds to the positive sentiment to the peso,” said Flavia Cattan-Naslausky, an analyst with RBS Securities Inc. in Stamford, Connecticut.
The currency was up 0.2 percent today to 12.3379 per U.S. dollar at 1:13 p.m. New York time, after earlier reaching 12.2921, the strongest level since October 2008.
The peso’s surge this year, the most among the 16 major currencies and the second-most among the 26 most-traded emerging market currencies, has been fueled by rising demand for its exports as the U.S. economy, Mexico’s biggest trade partner, recovers from a recession.
The yield on Mexico’s 10 percent peso bonds due in 2024 has declined 35 basis points, or 0.35 percentage point, from 8.27 percent on Dec. 31, according to Banco Santander SA. The price of the securities rose 0.47 centavo to 117.97 centavos per peso today, extending their advance this year to 3.19 centavos.
Put Options
Citigroup said that Mexican debt will join its World Government Bond Index after the county meets the criteria for three straight months, becoming the first Latin American country in the index, Citigroup said in an e-mailed statement. The debt may enter by October, the New York-based bank said in a statement.
Mexico “satisfies all three World Government Bond Index requirements -- size, credit and barriers to entry,” Citigroup said.
Mexico’s central bank is scheduled today to auction $600- million-dollar worth of put options, which allow it to sell the peso for the U.S. currency. Mexico’s central bank started to auction the options in February to accumulate foreign reserves. All of the options the bank sold last month were exercised by investors as the peso strengthened.
