Mexican Peso Rises on Inflation Bond Sale

Mexican Peso Inflation Bond Sale

The inflation bonds recently offered by the Mexican government have helped the Mexican peso rise over the last couple of days as it is believed foreign investors will buy them up.

Surprisingly, the Mexican peso has performed best against the U.S. dollar of the 16 major currencies in 2010.

It is estimated about $1.2 billion in 30-year bonds will be sold today.

“These bonds have a certain advantage and will be of interest to foreign and domestic investors,” Arnulfo Rodriguez, head of fixed income research, at Citigroup’s (NYSE:C) Banamex unit. “If inflation reaches 5 percent, than we are talking about an implicit rate of 9 percent, which would be very attractive.”