Mexico’s peso rallied to rank fourth most among the world’s major currencies after presidential candidate Enrique Pena Nieto claimed victory in national elections on a pledge to boost economic growth and private investment.
A preliminary count by the Federal Electoral Institute showed that Pena Nieto has between 37.9 percent and 38.6 percent of the vote, leading Andres Manuel Lopez Obrador of the Democratic Revolution Party, who has 30.9 percent to 31.9 percent. Pena Nieto said last night in the capital that Mexicans had opted to return to power his Institutional Revolutionary Party, which ruled for more than 70 years until 2000.
He may be the first president whose party controls congress since 1997, boosting speculation he will have more freedom to open up the state-controlled oil industry to more private investors, make it easier for companies to hire and fire workers and increase tax collection. The peso has appreciated 4.9 percent this year, beating all 15 other major counterparts.
The currency is strengthening on the “likelihood that some of these reforms will be passed under the leadership of Pena Nieto,” Benito Berber, a Latin America strategist at Nomura Securities Inc., said in a telephone interview from New York. “The reaction will be cautiously positive.”
The peso strengthened as much as 0.8 percent to 13.2505 per dollar, the highest level since May 8, before paring its gain to less than 0.1 percent at 13.3498 per dollar as of 9:26 a.m. in London, the fourth best among major currencies after the New Zealand dollar, Australian dollar and the Japanese yen. The currency rallied 3.8 percent in the five days through June 29, the best weekly performance since December, according to data compiled by Bloomberg.
The extra yield investors demand to own Mexican government dollar bonds over U.S. Treasuries widened three basis points, or 0.03 percentage point, to 205 basis points, according to JPMorgan Chase & Co.’s EMBI Global index. The spread was 256 basis points June 1.
Pena Nieto has maintained a lead throughout the campaign, fueled by pledges to boost salaries held back by economic growth that averaged 1.8 percent a year, half the rate of Brazil, since President Felipe Calderon took office in 2006. He has also promised to turn the tide in a drug war blamed for more than 47,000 deaths under Calderon’s National Action Party. Results for congressional seats haven’t been released yet.
“The way Pena Nieto thinks is much more pro-market” than Lopez Obrador, Claudio Irigoyen, head of Latin America fixed- income and foreign-exchange strategy at Bank of America Corp., said by phone from New York.
Supporters of Lopez Obrador, a former Mexico City mayor who has opposed more private investment in the oil industry, shut down the capital’s main business boulevard for weeks after the last presidential election, claiming the victory by President Calderon was marred by fraud.
Speaking to supporters last night in the capital, Lopez Obrador said there isn’t enough information for him to decide what his position will be after yesterday’s vote. He said in a televised message that his campaign will not act irresponsibly. Calderon congratulated Pena Nieto last night in a televised address and called on the nation to respect the election results. He said he’d work with Pena Nieto.
To contact the reporter on this story: Ben Bain in New York at [email protected]
To contact the editor responsible for this story: David Papadopoulos at [email protected]
A preliminary count by the Federal Electoral Institute showed that Pena Nieto has between 37.9 percent and 38.6 percent of the vote, leading Andres Manuel Lopez Obrador of the Democratic Revolution Party, who has 30.9 percent to 31.9 percent. Pena Nieto said last night in the capital that Mexicans had opted to return to power his Institutional Revolutionary Party, which ruled for more than 70 years until 2000.
He may be the first president whose party controls congress since 1997, boosting speculation he will have more freedom to open up the state-controlled oil industry to more private investors, make it easier for companies to hire and fire workers and increase tax collection. The peso has appreciated 4.9 percent this year, beating all 15 other major counterparts.
The currency is strengthening on the “likelihood that some of these reforms will be passed under the leadership of Pena Nieto,” Benito Berber, a Latin America strategist at Nomura Securities Inc., said in a telephone interview from New York. “The reaction will be cautiously positive.”
The peso strengthened as much as 0.8 percent to 13.2505 per dollar, the highest level since May 8, before paring its gain to less than 0.1 percent at 13.3498 per dollar as of 9:26 a.m. in London, the fourth best among major currencies after the New Zealand dollar, Australian dollar and the Japanese yen. The currency rallied 3.8 percent in the five days through June 29, the best weekly performance since December, according to data compiled by Bloomberg.
The extra yield investors demand to own Mexican government dollar bonds over U.S. Treasuries widened three basis points, or 0.03 percentage point, to 205 basis points, according to JPMorgan Chase & Co.’s EMBI Global index. The spread was 256 basis points June 1.
Pena Nieto has maintained a lead throughout the campaign, fueled by pledges to boost salaries held back by economic growth that averaged 1.8 percent a year, half the rate of Brazil, since President Felipe Calderon took office in 2006. He has also promised to turn the tide in a drug war blamed for more than 47,000 deaths under Calderon’s National Action Party. Results for congressional seats haven’t been released yet.
“The way Pena Nieto thinks is much more pro-market” than Lopez Obrador, Claudio Irigoyen, head of Latin America fixed- income and foreign-exchange strategy at Bank of America Corp., said by phone from New York.
Supporters of Lopez Obrador, a former Mexico City mayor who has opposed more private investment in the oil industry, shut down the capital’s main business boulevard for weeks after the last presidential election, claiming the victory by President Calderon was marred by fraud.
Speaking to supporters last night in the capital, Lopez Obrador said there isn’t enough information for him to decide what his position will be after yesterday’s vote. He said in a televised message that his campaign will not act irresponsibly. Calderon congratulated Pena Nieto last night in a televised address and called on the nation to respect the election results. He said he’d work with Pena Nieto.
To contact the reporter on this story: Ben Bain in New York at [email protected]
To contact the editor responsible for this story: David Papadopoulos at [email protected]