(Adds detail on investor holdings)
MEXICO CITY, May 25 (Reuters) - Foreign investors reduced holdings of Mexican peso debt in the first quarter while increasing holdings of local stocks, the central bank said on Monday.
Foreigners pulled $326 million out of Mexican peso debt in the quarter after piling $9.856 billion into government bonds in the prior three months, the bank said.
Mexico’s peso hit a record low in March, hit by bets that investors could pull funds out of emerging markets ahead of an expected rise in U.S. interest rates.
Holdings of peso-denominated debt by foreigners have climbed steadily since 2009, but they are beginning to dip off a record high of nearly 2.2 trillion pesos ($144 billion) set in February, according to data on the central bank’s website.
An anticipated rise in U.S. borrowing costs is expected to draw investors out of emerging markets and into dollar debt. The central bank is concerned that a further slump in the peso could fan consumer prices higher.
Foreigners increased holdings of Mexican stocks after two quarters of outflows, drawing in $1.343 billion during the first quarter, the central bank said.
Mexico’s current account deficit reached $9.446 billion in the quarter, the central bank said. That is nearly double the $5.083 billion in the fourth quarter.
The accumulated current account deficit for the quarter was the equivalent of 3.2 percent of gross domestic product, the central bank said. (Reporting by Alexandra Alper and Michael O‘Boyle; Editing by Lisa Von Ahn)