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By Walter Brandimarte
RIO DE JANEIRO, July 1 Mexico's currency hit its
weakest level on record on Wednesday, part of a broader slump in
regional currencies depressed by concern that Greece may leave
the euro zone and that U.S. interest rates are headed higher.
Mexico is seen as particularly vulnerable to the effects of
higher borrowing costs in the Unites States, its main trading
partner. The country's manufacturing sector slipped in June to
its lowest in 11 months, a survey showed, even before the
potential U.S. rate hike.
"The drop in the PMI (purchasing managers' index) adds to
the list of data from Mexico that have come in weaker than
expected in recent weeks," Neil Shearing, chief emerging markets
economists with London-based Capital Economics, wrote in a note
to clients.
The Mexican peso fell to as much as 15.8106 per
dollar, its weakest level on record, after private payrolls data
showed the U.S. economy was gathering solid momentum after
contracting at the start of the year.
The numbers boosted prospects that the U.S. Federal Reserve
will raise interest rates more aggressively than expected,
potentially reducing the allure of higher-yielding, riskier
emerging market assets.
U.S. employment data, rather than concern over Greece, is
the main reason for the peso's weakness, Mexico's Finance
Minister Luis Videgaray said on Wednesday.
Citing foreign reserves worth $192 billion, he added that
Mexico has enough resources to ensure the smooth functioning of
its foreign exchange market.
Other Latin American currencies also posted losses, with the
Brazilian real dropping 0.6 percent and the Colombian
peso 1.1 percent weaker.
Concern over potential contagion from Greece, if the country
leaves the euro zone, left investors more averse to risk in
general.
Many analysts say, however, that financial links between
Greece and Latin America are very weak, which should prevent
large market impacts here.
Key Latin American stock indexes and currencies at 1645 GMT:
Stock indexes daily % YTD %
change change
Latest
MSCI Emerging Markets 970.92 -0.14 1.67
MSCI LatAm 2493.78 -0.94 -7.71
Brazil Bovespa 52805.51 -0.52 5.60
Mexico IPC 45085.16 0.07 4.50
Chile IPSA 3859.29 -0.97 0.22
Chile IGPA 18824.45 -0.81 -0.24
Argentina MerVal 11832.01 1.5 37.92
Colombia IGBC 10217.72 -0.78 -12.18
Venezuela IBC 12871.11 0.11 233.56
Currencies daily % YTD %
change change
Latest
Brazil real 3.1257 -0.56 -14.98
Mexico peso 15.7855 -0.32 -6.60
Chile peso 638.8 0.03 -5.07
Colombia peso 2633.4 -1.09 -9.32
Peru sol 3.182 -0.09 -6.38
Argentina peso (interbank) 9.0900 -0.03 -5.94
Argentina peso (parallel) 13.5 -0.74 3.70
(Editing by Christian Plumb)
