FX: Mexican Stocks Flat In Light Trading; Peso Weaker Vs Dollar
Mexican stocks were flat in light early trading Monday with U.S. markets closed for Presidents' Day.
Around 9:50 a.m. EST, the market's IPC index of leading issues was practically unchanged from Friday's close at 19,369.27 points. Volume was just 163,000 shares worth 5.1 million pesos ($350,000).
Media group Televisa (TV) CPO shares were down 0.8% to MXN37.90, and retailer Soriana (SORIANA.MX) B shares were down 5.9% to MXN22.70. Home builder Homex (HXM) shares were up 1.7% to MXN48.77.
The peso opened weaker against the dollar, quoted in Mexico City at MXN14.5265 compared with MXN14.4060 at the close Friday.
A local currency trader said the peso touched MXN14.62 in early transactions before recovering some ground.
The "wave of global uncertainty" is hurting the peso, making it one of the hardest-hit emerging market currencies, BBVA Bancomer said in a report.
The minimum exchange rate for the central bank to sell dollars at its scheduled auctions is MXN14.7213.
UBS Investment Research said in a report that it expects the Bank of Mexico to take currency volatility into consideration in its monetary policy decision on Friday.
"It is our take that Banco de Mexico's board fears that market participants could be allocating their overall emerging market short positions mostly on the Mexican peso, due to Mexico's large FX market liquidity (compared to other emerging economies) and its closeness to the recessionary U.S. economy," UBS said.
UBS said it now expects the central bank to cut the overnight rate by only 25 basis points, to 7.5% from 7.75%, instead of 50 basis points.
The central bank began easing monetary policy last month with a 50 basis-point cut in the overnight rate.
-By Anthony Harrup, Dow Jones Newswires; (5255) 5001 5727; anthony.harrup@dowjones.com
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