Mexican Currency Increases to Two-Month High on Growth Outlook

Mexico’s peso rose to its highest in two months on expectations that growth in the U.S., Mexico’s biggest trading partner, will sustain demand for goods from Latin America’s second-biggest economy.

A report last week showing manufacturing in New York state unexpectedly accelerated bolstered confidence the U.S. economy is withstanding a slump in the housing market. In the first six months of 2006, 96 percent of Mexico’s non-oil exports were from the manufacturing sector.

The Federal Reserve Bank of New York’s general economic index rose to 22.9 this month from 13.8 in September. Economists expected a reading of 11.2. A number greater than zero signals most manufacturers reported business is getting better.

The yield on Mexico’s government 8 percent peso bond due in December 2015 fell 0.015 percentage point to 8.23 percent, its lowest since September 20. The price, which moves inversely to the yield, rose 0.10 centavo to 98.51 centavos, according to Santander Central Hispano SA.