Peso and IPC down in Mexico on interest rate expectations

The Mexican peso lost value on Tuesday as investors worried about a possible drop in domestic interest rates.

The peso was down 0.44 percent to 10.79 pesos to the dollar on speculation that interest rates in Mexico could be cut as early as this week when the central bank holds its twice-monthly monetary policy meeting.

The overnight lending rate fell by 10 basis points to 9.60 percent on Monday on anticipation that the central bank will drop interest rates, but it edged back up on Tuesday to 9.74 percent, around its recent level.

Meanwhile in the equities markets, the IPC index lost 0.44 percent as well, to 14,706, in late morning activity.

The telecommunications sector was down as America Movil lost 1.46 percent to $22.27 and Telefonos de Mexico dropped 0.10 percent to 10.41 pesos after it agreed to be a partner in Telecom, Colombia’s state-owned fixed-line company.

Telefonos’ shares trading in the United States fell 0.67 percent to $19.25. Not all stocks were down, however, as glass maker Vitro gained 2.68 percent to 13.80 pesos and its shares trading in New York gained 0.52 percent to $3.84.

Vitro has gained more than 40 percent since August 10 amid rumors that it will sell part of its Vitrocrisa subsidiary in order to reduce its debt.

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