The Mexico's benchmark IPC stock index rose 0.38 percent to 26,213.38 points on Friday. The Conglomerate Group Carso, an industrial and retail holding company controlled by Mexican tycoon Carlos Slim, climbed 3.33 percent to 39.14 pesos.
Shares in dominant cellphone operator America Movil rose 0.51 percent to 23.64 pesos, while its New York traded shares were up 1.28 percent to $43.53. Its holding company America Telecom, which is used by Slim to control America Movil, fell 0.29 percent to 95.55 pesos.
The holding company will be merged with America Movil at the close of Friday's trading session. Miner Group Mexico, a major copper producer, rose 1.54 percent to 39.52 pesos as copper rose 1.69 percent in New York trading.
Mexico's peso currency firmed on Friday as oil, a major export, rose and investors digested a government plan to control runaway tortilla prices that have pushed up inflation.
Stocks closed up. The peso gained 0.41 percent to 10.879 per dollar, near a two-week high. The peso tends to track the ups and downs of crude oil, which was up 3.01 percent on Friday to $52 per barrel for US crude for February delivery.
Soaring prices in recent weeks for tortillas, the thin corn patties that are a staple of the Mexican diet, have helped push Mexican inflation above the central bank's target range of 2 percent to 4 percent.
After coming under pressure to control prices, the government said on Thursday that corn flour producers, including market heavyweight Gruma, had agreed to limit the price of their product.
Some economists were unconvinced that reining in tortilla prices would slow inflation for long and think the central bank will not cut rates soon, as previously expected, or might even raise them. "Our view is that the next move in Mexican short rates is up, not down," Barclays Capital said in a report on Friday.
Stable or higher rates in Mexico attract more investment from yield-hungry investors, pushing up demand for the peso. Others saw the price plan as positive for long-term inflation expectations, which has helped bring down yields on Mexico's long-term peso bonds.
"Yesterday's news supports our view that inflation pressures are contained and that the recent shocks will prove temporary," Alonso Cervera, an economist at Credit Suisse, said in a report.
Analysts like Francisco Diez of RBC Capital Markets in Toronto say lower inflation expectations are increasing demand by foreign investors for recently battered Mexican bonds, thereby boosting the peso.
Bond prices, which move inversely to yields, took a hit in the first half of January as investors worried the tortilla-fuelled inflation spike could last for months.
The yield on Mexico's benchmark 10-year peso bond opened sharply down on Friday after tumbling on Thursday following the announcement of the tortilla accord. It edged back up on Friday, but was still off 16 basis points since the announcement, at 7.86 percent.
Comments
Comments are closed.