(In paragraph 6, please read that intraday "the peso reached
19.29" not "19.52")
By Bruno Federowski
SAO PAULO, Sept 14 Mexico's currency fell on
Wednesday to its lowest closing level ever, with investors on
edge due to uncertainty over the timing of the next U.S.
interest rate increase and sinking crude oil prices.
Market expectations about U.S. monetary policy have been
through a roller coaster over the last few weeks as traders
sought to decipher contradictory comments by Federal Reserve
policymakers and the implications of weak economic data.
Traders hope the Fed will offer more clarity following its
policy meeting next week, when it is expected to leave rates
Investors were also worried that other major central banks,
such as the European Central Bank and the Bank of Japan, could
be close to reducing their monetary support.
A spike in crude prices following a surprise
draw in U.S. oil stocks briefly boosted demand for currencies
from commodity exporters. But the move lost steam, with the
Mexican peso closing at 19.21, its lowest close
In intraday trading the peso reached 19.29, its lowest level
in nearly three months. Mexico's benchmark IPC stock index
was down 0.84 percent to 45,767.57 points, its weakest
closing level since July 8.
In Brazil, recent volatility led the central bank to reduce
the amount of reverse currency swaps it sells on a daily basis
to 5,000 from 10,000.
Reverse currency swaps function like future dollar purchases
from investors and are typically used to weaken the Brazilian
The real retreated 0.79 percent to close at 3.34 per dollar
as traders worried that newly inducted President Michel Temer
could struggle to find support among both voters and lawmakers
for painful austerity measures.
(Reporting by Bruno Federowski; Editing by Meredith Mazzilli
and David Gregorio)