US automaker worries hit Mexico's peso, stocks up
MEXICO CITY, Nov 21 (Reuters) - Mexico's peso slipped on Friday, ending its worst week in a month as worries about the U.S. automaker's rescue plan raised concerns about the direct impact on the Mexican economy from Detroit's downturn.
The peso MXN= MEX01 currency ended down 0.25 percent to 13.835 per dollar at the central bank's close on Friday but lost 6.47 percent since Monday, its worst performance since the week of Oct. 20.
Meanwhile, the IPC stock index .MXX closed 0.33 percent higher at 18,251.41 points, lifted from negative territory by a late session rally in New York following reports that President-elect Barack Obama has chosen Timothy Geithner, president of the Federal Reserve Bank of New York, to be his U.S. Treasury secretary.
The troubles of U.S. automakers, which failed to secure an immediate government bailout this week, have weighed heavily on the peso, as Mexican car and auto parts factories, as well as their suppliers, are closely tied to Detroit's automakers.
Fears of a U.S. recession bodes poorly for Mexico, which sends 80 percent of its exports to its northern neighbor.
Many economists believe Mexico will be pushed into recession by the U.S. slowdown.
"Industrial production here could be deeply affected. We expect production to fall 2 percent next year, but it could fall 3 or 4 percent if one of the U.S. automakers goes down," said Gabriel Casillas, an economist at UBS in Mexico City.
The global credit crisis and predictions of a U.S. recession have erased more than 20 percent of the peso's value against the dollar this year.
Mexico's central bank sold $400 million in currency markets on Friday to help support the peso, bringing the total amount of reserves spent since October to defend the currency to nearly $14.4 billion.
The central bank also sold 1.2 billion pesos in interest rate swaps that are aimed at helping the battered local bond market.
The yield on the government's benchmark 10-year peso bond MX10YT=RR fell by 9 basis points to 9.69 percent.
In the equities market, shares in Latin America's biggest bottler and brewer FEMSA (FMSAUBD.MX)FMX.MX gained 6.26 percent to 34.48 pesos.
Offsetting gains, shares of America Movil (AMXL.MX)(AMX.N), Latin America's biggest cell phone operator, lost 1.28 percent to 19.22 pesos. (Reporting by Michael O'Boyle; Editing by Diane Craft)
