Mexico peso gains on US recovery hopes, stocks up
(Recasts, adds closing stock prices)
MEXICO CITY, Aug 10 (Reuters) - Mexico's peso firmed to its highest since May on Monday on hopes of an economic recovery in the United States and bets the currency will outperform other emerging market assets.
The peso MXN=MEX01 gained 0.35 percent to 12.92 per U.S. dollar as other emerging market currencies sank.
"There has been a bit of a change of perception regarding Mexico, thinking that the worst is already behind," said Francisco Diez, director of emerging markets trading at RBC Capital Markets in New York.
The currency earlier had strengthened even further, touching 12.87 per dollar.
A U.S. government report last Friday that showed employers in the United States shed fewer jobs than expected in July came on top of improving manufacturing and housing data that suggest the economy is improving in the United States.
That bodes well for a rebound for Mexico's battered exports, about 80 percent of which are sent to its northern neighbor.'
The IPC stock index .MXX closed up 0.45 percent to 28,305, boosted by gains in top local retailer Wal-Mart de Mexico (WALMEXV.MX).
The peso got a boost last week after Moody's Investors Service unexpectedly issued a stable outlook on Mexico's debt, offsetting worries of downgrades from other Wall Street agencies.
Concern about debt downgrades have weighed on the peso, which has gained only around 7 percent this year compared to big gains in other emerging markets, such as Brazil's real (BRBY), which has advanced around 26 percent against the dollar.
Investors now think the peso will be able to close some of the gap with gains seen in other currencies.
"You are seeing the peso outperform the region as attention switches to better valuations for the Mexican peso versus Brazil and Colombia," said Clyde Wardle, a currency strategist at HSBC in New York.
RBC's Diez said investors were unwinding positions in other emerging market currencies, like the real, that had been funded with the peso.
The peso has been used in recent months as a funding currency to purchase other emerging market assets that investors had been betting would do better against the dollar than Mexico's currency.
In equities trading, shares in Wal-Mart de Mexico (WALMEXV.MX) gained 2.87 percent to 48.02 pesos.
Inbursa (GFINBURO.MX), the financial group controlled by billionaire Carlos Slim, rose 3.36 percent to 39.70 pesos. (Reporting by Michael O'Boyle; Editing by Kenneth Barry)
