NEW YORK: The Mexican peso weakened more than 1.5 percent on Tuesday, leading a sell-off in Latin American foreign exchange markets as nagging worries about global economic growth and Europe's fiscal health made investors more averse to risk.
Fears that banking troubles may force Spain to take a bailout similar to Greece's and Portugal's drove Spanish bond yields to levels not seen since December, a reminder that the euro-zone debt crisis is still not over.
Global growth concerns were also on the rise after China reported a surprise trade surplus of $5.35 billion in March, driven by a pick-up in Chinese exports. But imports were weaker than expected, another sign that domestic demand is cooling down.
Because Europe and China are key importers of Latin American goods and commodities, lower economic growth in those markets often has an impact in Latin America. The news from China added to concerns about the pace of the US economic recovery, following Friday's disappointing jobs data in the United States.
"The sell-off is due to this risk aversion abroad, most currencies are suffering," said Flavio Serrano, a senior economist with BES Investimentos in Sao Paulo. "Dollar inflows also seem to have decreased."
Mexico, whose economy is more dependent on exports to the United States, suffered the largest currency losses. The peso slid 1.6 percent to 13.1624 per US dollar.
The Brazilian real followed suit, declining 0.6 percent to 1.8286 per dollar.
The Chilean peso lost 0.86 percent to finish near a two-week low of 489.00 while the Colombian peso eased 0.57 percent to 1,784.30.
BUYING OPPORTUNITY?
On Friday, when Latin American markets were closed for the Good Friday holiday, the US government reported that jobs creation in March fell to the lowest level since October, raising questions about the pace of recovery of the world's largest economy.
"The weak non-farm payrolls data certainly reinforces the skepticism in terms of the resiliency of US economic growth," said Siobhan Morden, head of Latin America strategy at Jefferies & Co.
She said Latin American markets suffered a knee-jerk reaction, but said there is a buying opportunity.
"Even though the US data has been erring at below expectations, this does not suggest that sentiment should shift back towards the extreme of double-dip concerns but rather that the US economy is recovering at a slower rate," she said.
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