Business | Mexico's Peso Rises for a Third Day on Budget Confidence, Oil : Jhoni.com

Mexico's Peso Rises for a Third Day on Budget Confidence, Oil

Text Size: Oct 14, 2009 @ 07:38 AM, Business, Catarina Saraiva

Oct. 14 (Bloomberg) -- Mexico’s peso strengthened for athird day as growing confidence that the global economicrecovery is quickening pushed oil to a one-year high, and onspeculation the 2010 budget will pass with fiscal reforms.

The currency climbed 0.4 percent to 13.0677 per U.S. dollarat 9:01 a.m. New York time, from 13.1187 yesterday. Earlier ittouched 13.0256, the strongest level since Aug. 26.

Crude oil, which funds about 38 percent of the Mexicangovernment’s budget, topped $75 a barrel in New York. Lawmakersin Mexico are in the midst of 2010 budget discussions as thedeepest economic slump since the 1930s reduces tax collectionand output falls at the state oil monopoly.

The peso’s gain “is a function of rising optimism thatthere won’t be a significant watering down of the net impact ofthe 2010 budget,” said Paul Biszko, emerging-markets strategistwith RBC Capital Markets in Toronto. “Especially this week,where we’re going to see the full details of the PRI’s counterproposal to the government’s budget plan for next yearrevealed.”

President Felipe Calderon last month proposed a 2010 budgetthat would increase consumption and income taxes while reducingspending by 218 billion pesos ($16.7 billion) as he seeks torein in a deficit that’s widening as oil output falls. Lawmakersfrom the Institutional Revolutionary Party, the country’sbiggest opposition party, are split over some aspects of theproposal.

The lower house finance committee is slated to begindebating the budget this week. Deputies are scheduled to vote onthe income portion of the budget by Oct. 20 and the spendingsegment next month.

To contact the reporter on this story:Catarina Saraiva in New York at asaraiva5@bloomberg.net

Last Updated: October 14, 2009 09:13 EDT

Source: Bloomberg

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