Saturday, May 8, 2010

Goldman Sachs Advises Buying Mexican Peso on Recovery

May 7 (Bloomberg) -- Goldman Sachs Group Inc. recommended buying the Mexican peso against the dollar, saying strengthening growth in the Latin American country’s economy will help the currency recover after an “irrational” sell-off.

The peso added 0.7 percent to 12.9002 at 3:40 p.m. New York time today and will advance 5.7 percent to 12.2 per dollar, Fiona Lake, an analyst at Goldman Sachs, wrote in a note today. The peso has dropped 4.6 percent versus the dollar this week, its biggest decline since November 2008, on concern the European debt crisis will derail the global economic rebound.

“The global macro picture remains extremely supportive of a clear pro-cyclical stance,” Lake said. “Markets have displayed a certain degree of irrational behavior in recent days, which suggests the related price action may have overshot. The peso outlook has improved very significantly as growth has strengthened rapidly.”

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