Peso Loses More Value Against Dollar in Mexico : Currency: Exchange rates fluctuate wildly at border exchange houses.

The Mexican peso lost more value against the U.S. dollar on Mexico’s currency markets Monday as jittery investors anticipated declining interest in Mexican securities and continuing political unrest in Chiapas.

The peso slipped more than 30% against the dollar last week after the Mexican government decided to let its value float freely against the dollar. An extended period of volatility could be in store as investors wait to see how strongly the Mexican government acts to control inflation and whether foreign investors regain confidence or flee the country, analysts said.

On Monday, the peso slipped in two-day futures contracts, closing at 5.1 pesos to the dollar, compared with 4.95 on Friday, a 3% loss, said Carlos Escalante, an analyst at Vector-Mex brokerage in Mexico City.

Because U.S. markets and Wall Street investment houses were closed Monday for the Christmas holiday, trading was light, sporadic and volatile. An analyst at Baring Securities in Mexico City said trading today will more accurately reflect the peso’s worth.

The peso’s value declined amid wildly fluctuating quotes Monday at several currency exchange houses at the U.S.-Mexico border in San Ysidro, ranging from 4.69 new pesos to nearly 5 to the dollar Monday afternoon. The rate “is changing every five minutes,” said an employee at Trolley Stop Money Exchange in San Ysidro.

“The market is extremely volatile, and my guess is that it will be this way for a couple of months” said Enrique Kennedy, manager of Bancamex, owner of several exchange houses in San Ysidro.

The Mexican stock market index, meanwhile, closed up 0.94 points, or 0.4%, to close at 2,342.79 on Monday. Mexican stocks have risen in past days as the weak peso has pushed share prices higher. This is in part because investors figure that many Mexican companies will benefit from the devaluation as Mexican exports get cheaper and imports get more expensive, making Mexican goods more competitive at home.

Further fallout from the devaluation is expected this week as traders and government officials return from the Christmas holidays. An estimated $800 million of tesobonos, which are fixed-income securities denominated in dollars, will mature this week. Traders fear owners of the bonds won’t roll over their holdings and will seek instead to obtain dollars for the maturing securities, driving down the peso.

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Reuters and Bloomberg Business News contributed to this report.

* A STUNNED NEWCOMER

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