Mexico Peso Falls on Concern Swine Flu to Deepen Economic Slump

By Valerie Rota

April 27 (Bloomberg) -- Mexico's peso sank to its lowest in almost three weeks on concern an outbreak of the deadly swine flu will deepen an economic slowdown.

The peso fell 1.7 percent to 13.5718 per U.S. dollar at 8:10 a.m. in Tokyo, compared to 13.3405 on April 24. The decline was the biggest among the 16 most-traded currencies against the dollar. Trading volumes in the Mexican peso usually picks up at about 7 a.m. New York time.

The flu outbreak, which has claimed as many as 81 lives, may slow dollar flows from tourism and curb consumer spending at restaurants, theaters and other venues where crowds gather, said Gerardo Margolis, a vice president for emerging markets at TD Securities in Toronto.

The spread of the virus ``has an immediate economic impact and investors will be cautious,'' Margolis said. ``There will be a drop in consumption and tourism and that affects the currency.''

Foreign tourism brought $13.3 billion into the economy last year, making it Mexico's third-largest source of foreign currency behind oil exports and remittances from Mexicans living abroad. Private consumption accounts for about 50 percent of total demand for goods and services in Latin America's second- biggest economy.

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