Mexico's peso closed weaker against the dollar Monday as local stocks came under heavy selling along with other emerging markets.
The peso was quoted closing in Mexico City at MXN10.9125 to the dollar, compared with MXN10.9285 at the opening and MXN10.8725 at Friday's close.
Emerging market stocks were hard hit as investor worries about the economic fallout from U.S. financial sector problems led them to cut back on riskier assets. The Mexican stock market's IPC index was down 2.8%, despite gains in the Dow Jones Industrial Average.
"The main factor acting against the peso in the short term is the perception of lower growth in the U.S.," the Invex brokerage said in its weekly outlook.
With people still thinking the U.S. Federal Reserve could cut interest rates further, and the Bank of Mexico not expected to raise the local overnight rate again this year, the peso should find support, Invex said, but added that in "a moment of great nervousness, that condition could be ignored, pushing the exchange rate to levels above MXN11.00."
Bonds trading on the local debt market were also lower Monday, pushing yields up. The yield on 10-year government bonds due 2016 was up one basis point at 7.98%, and the 20-year yield due 2024 was up two basis points at 8.04%.