MEXICO CITY -- President Clinton's open-ended offer to lend Mexico more money to overcome its economic crisis reassured investors yesterday and buoyed Mexican stocks after two days of steep losses.
The peso recovered some strength, closing at 5.675 to the dollar, compared with Tuesday's close of 5.85. Mexican companies and funds on the New York Stock Exchange rebounded in active trading.
Interest rates on Mexican Treasury certificates rose to 40 percent from about 33 percent last week as the government offered higher rates to attract investors. Yet, demand for the notes was tepid.
The intense volatility of the last few days continued yesterday in spite of the turnaround. At one point in midmorning, the Mexican stock market was down 6.7 percent, exceeding Tuesday's 6.26 percent loss. But investors began feeling more confident after Mr. Clinton's backing, and the main bolsa index ended the day at 2,027.87, up 2.82 percent.
Stock exchanges in other Latin American countries followed Mexico's lead and also recovered some.
"The U.S. offer to be lender of last resort to Mexico is very comforting," said Soraya Betterton, manager of Latin American equities at G.T. Capital Management in San Francisco. "What he said was that however many billions it takes, for however long it takes, the United States will be willing to fund Mexico's short-term funding needs."
Mr. Clinton said "it is in America's economic and strategic interests that Mexico succeeds." He was prepared, he said, to increase the $9 billion the United States had already committed to assisting Mexico.
Throughout the three and a half weeks of the crisis, the biggest worry of many investors has been the $28 billion worth of Mexican Treasury bonds that are indexed to the dollar and scheduled to fall due in 1995. Foreigners hold 80 percent of those bonds and have recently redeemed some of them for dollars, rather than rolling them over, pulling their money out of Mexico.
Mexico can draw on an $18 billion international loan package, but in recent days even this has not been sufficient to calm the market.