Mexican Peso Rises as Global Rate Cuts Boost High-Yield Demand

By Valerie Rota

Dec. 4 (Bloomberg) -- Mexico’s peso rose as central banks around the world cut lending rates to spur economic growth, buoying demand for higher-yielding assets.

Global reductions in borrowing costs “make the peso more competitive,” said Mario Copca, a currency strategist at Metanalisis SA in Mexico City.

The peso advanced 0.4 percent to 13.5445 per U.S. dollar at 9:47 a.m. New York time, from 13.6007 yesterday. Brazil’s real rose 0.7 percent, while Chile’s peso advanced 0.5 percent.

The European Central Bank cut its main refinancing rate today by the most in its 10-year history to 2.5 percent, following rate reductions in the U.K., Sweden and New Zealand. Mexico’s central bank kept its overnight target rate at 8.25 percent on Nov. 28 for a third month.

The yield on Mexico’s 10 percent bond due in December 2024 was little changed at 8.95 percent. The bond’s price increased 0.04 centavo to 108.89 centavos per peso, according to Banco Santander SA.

To contact the reporter on this story: Valerie Rota in Mexico City at vrota1@bloomberg.net