2013.03.2807:18:14UTC+00Mexican Peso surges as Cyprus controls aid international GDP outlook

Mexico’s peso advanced as Cyprus reveal capital controls to stop outflows when banks reopen tomorrow, tempering assumptions that the island nation’s dilemma will weigh on international economic stability.

The peso advanced 0.1 percent to 12.3360 per U.S. dollar at 3 p.m. in Mexico City, bringing its rally this month to 3.6 percent, the highest compare to 16 major dollar counterparts. The currency has gained 4.2 percent this year, and it increased 8.4 percent in 2012. Mexico’s stock market will be closed March 28-29 for Easter holidays, although the peso will still be exchanged.

Cyprus said capital controls to stop outflows when banks reopen tomorrow after closing for nearly two weeks as the island faced monetary breakdown. The controls involve a 300-euro ($383) daily limit on withdrawals, according to a decree from the Central Bank of Cyprus.

“News came out that they were going to implement capital controls” in Cyprus, helping the peso climb, Rafael Camarena, an economist at Grupo Financiero Santander Mexico SAB, said in a telephone interview. “Possibly with these new regulations they’ll be able to avoid a panic.”

Earlier today, the peso loses its strength as much as 0.6 percent as some investors needed a place to hide in the dollar ahead of the extended weekend, according to Camarena.

Yields on peso bonds due in 2024 dropped two basis points, or 0.02 percentage point, to 5 percent. The price boost 0.19 centavo to 144.28 centavos per peso.