Zloty spurred by economic forecasts and Mexican Peso continues its fall

Zloty spurred by economic forecasts and Mexican Peso continues its fall

08-29-2009 10:34

Poland’s Zloty continued its rise while the nation’s economy demonstrates one of the fastest recuperations regionally, raising the demand for the Polish currency in the region. The Mexican Peso fell versus the Greenback for the fifth consecutive day at the end of this week’s trading session as it declined more than 3% on the back of suggestions that the central bank may alter the day by day US Dollar auctions.

Zloty spurred

In the previous quarter the Polish expansion exceeded economists’ expectations, while the Eastern European nation is being regarded as one of the most stable economies in the region, which has a positive influence on the Zloty as it rises against various currencies. However, the Polish currency gains mostly versus the European common currency due to the fact that the Zloty faced an intense depreciation throughout the deepest period of the worldwide recession. The Zloty rose for the second straight week due to Poland’s economic prospect.

Peso continues its fall

The Mexican Peso traded at $ 13.2375 in proportion to the US Dollar at the end of the Mexican trading session, while on Thursday it traded at $ 13.2350, in comparison with last week’s level of $ 12.8335. Mexico's largest bank, BBVA Bancomer, stated yesterday: “The Peso is corrected as a result of technical factors.”

Possible alteration

Investors are not only focused on profit-taking but also on a possible alteration in the day by day Dollar-auction policy of the Mexican exchange committee, which consists of ministry of finance and central bank officials. The committee will evaluate the policy meeting at September 8.

Presumption quite severe

Banco de México, Mexico's central bank, sells $50 million from reserves daily at Forex markets and up to $250 million when the Mexican Peso falls 2% or more in comparison with the last trading session. A trader at Invex Grupo Financiero in the capital of Mexico commented: “Presumption concerning the day by day Dollar selling is actually quite severe.” It is expected that the committee will at least cancel the daily auction of $50 million that will start September 9. With the decline in Forex market fluctuations, the conditional Dollar auction has only been prompted twice during the last three months, recently on last Wednesday.

Diminish the extent

BNP Paribas, a European banking and financial group, reported: “In our opinion the authorities will probably cancel these auctions, despite the fact that the poor results of the Peso during the last few days could make them decide to diminish the extent of the sales instead.” Several analysts believe that the exchange rate will decline beneath MXN13 in the mid-term. BBVA Bancomer, headquartered in Mexico City, stated: “We consider the present levels as a favorable scenario for establishing long positions.”