Flying Peso's

Mexico's peso reached the highest level in two years after a report showed an unexpected increase in U.S. retail sales, underpinning bets that demand for exports from Mexico's biggest trading partner will stay strong.

The peso, the biggest gainer among the six most-traded currencies in Latin America, was also

buoyed by speculation further reductions in U.S. interest rates will make local fixed- income assets more attractive to foreign investors.

Speculation that exports ``will sustain currency flows detonated gains in the peso,'' said Alejandro Martinez, a fixed- income analyst in Mexico City at HSBC Mexico SA. ``The increase in the yield differential also helps maintain a strong peso.''

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Importance: It is good that the peso is rising in value, but if it's all based on or mostly based on what the U.S. economy is doing don't expect for it to last.

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The following events may influence trading in Latin American local bonds and currencies today. Bond yields and exchange rates are from the previous session.

Chile: The government announced temporary tax cuts yesterday to stimulate the economy as drought and high energy prices threaten to slow growth and stoke inflation.

Colombia: Fitch Ratings affirmed its outlook on Colombia's debt yesterday at BB+, the highest non-investment grade, with a stable outlook.

Mexico: President Felipe Calderon announced an economic stimulus package yesterday worth 60 billion pesos ($5.6 billion) to help protect the nation from a slowdown in the U.S., its biggest trading partner.

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Importance: Latin America tries to prepare for economic stability. Mexico's peso rises slightly against the dollar. I suppose things could be worse...

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Mexico peso off on US worries; stocks up on miners

MEXICO CITY, Feb 21 (Reuters) - Mexico's peso currency weakened for the third straight session on Thursday as investors worried about the health of the U.S. economy, while stocks jumped on international metals prices.

The peso MEX01 lost 0.05 percent to 10.7930 per dollar, while the benchmark IPC stock index .MXX rose 0.47 percent to 29,361.32 points.

Data in the United States showed manufacturing output in the mid-Atlantic region slowed to a seven-year low in February.

Economists say trouble in the U.S. economy could translate into less demand for Mexico's exports and the peso.

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Importance: This is important not only to Mexico but also to the world economy. The article indicates that because of this, there is less demand for Mexico's exports and the Peso. On a different note, U.S. manufacturing in the mid-atlantic is at a seven year low. This could also be relevant to the apparent upcoming recession.

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The American Mexico

MEXICO CITY - Mexico indicated Wednesday it expects the downturn in the U.S. will mean much slower growth this year for its own economy, which depends on its northern neighbor for the bulk of its trade and investment.

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Imortance: It seems that Mexico might be leaning on the U.S. a little to hard if so much of there hopes ride on the U.S. economy alone, but now that NAFTA is doing their thing and Mexico is losing their farmers it could be a bad situation.

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Peso Falls

Mexico's peso fell the most in 10 weeks amid falling global stock prices and mounting speculation the world economy is slowing.


The peso weakened 0.75 percent to 10.9858 per dollar at 11:44 a.m. New York time from 10.9045 on Jan. 18. The currency's decline was the largest since Nov. 9.


Rising unemployment and a contraction in manufacturing output in the U.S. have reinforced speculation that the world's largest economy is slipping into recession. The European economy may be starting to suffer from the U.S. subprime mortgage slump as industrial production shrinks and investor confidence wanes.


Slowing global growth threatens to trim consumer demand for Mexican exports, accounting for about 30 percent of gross domestic product.

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Importance: The drop in the Mexican peso is one of many possible economic indications of a world economic "slow-down," apparently instigated by the recessing of the U.S.'s economy. Now in addition to the increased crime, President Calderon must contend with fostering economic stability and growth.

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