Bloomberg News

Mexico Announces Dollar Auctions to Reduce Peso Volatility

December 06, 2011

(Updates with details in second paragraph.)

Nov. 29 (Bloomberg) -- Mexico’s central bank will auction $400 million of reserves starting Nov. 30 when the peso weakens more than 2 percent.

The Banco de Mexico will offer the $400 million “via auctions at an exchange rate, as a minimum, will be 2 percent greater than the exchange rate determined the previous working day,” according to an e-mailed statement today from the nation’s Currency Exchange Commission.

The measure aims to increase liquidity, the commission said.

“It basically shows that Banxico is not getting comfortable with the peso at these levels,” said Ram Bala Chandran, a Latin American currency and rates strategist at Citigroup Inc. in a telephone interview from New York. “It sort of puts a cap on Mexico peso selloff in the near term.”

To contact the reporter on this story: Nacha Cattan in Mexico City at ncattan@bloomberg.net

To contact the editor responsible for this story: Jonathan Roeder at jroeder@bloomberg.net


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