Mexico’s Peso Gains as PRI Seeks More Spending Cuts in 2010

Mexico’s Peso Gains as PRI Seeks More Spending Cuts in 2010
Published: 08 October 2009

Mexico’s peso gained for a fourth day as lawmakers from the Institutional Revolutionary Party said they will seek “more aggressive” spending cuts than President Felipe Calderon proposed in his 2010 budget plan.

The currency rose 0.8 per cent to 13.3683 per U.S. dollar at 5 p.m. New York time, from 13.4674 yesterday. The peso has gained 3 percent in the past four days.

Luis Videgaray, a PRI lawmaker and head of the budget committee in the lower house of Congress said today his party will seek further spending cuts. Cemex Chief Executive Officer Lorenzo Zambrano urged the Mexican Congress to approve tax reforms in the 2010 budget that include a special two per cent tax on consumption to help boost non-oil revenue.

“Recent comments about the likelihood that the fiscal reform is going to be approved” are driving the peso’s gain today, said Gerardo Margolis, a vice president for emerging markets at TD Securities Inc. in Toronto.

Mexican Finance Minister Agustin Carstens said earlier this week he was “comfortable” his country could maintain an investment-grade debt rating as the government seeks to raise taxes.