MEXICO CITY – Mexico says it’s ready to intervene in currency markets to fight the peso’s fall against the dollar amid concerns over dropping oil price and a possible increase in U.S. interest rates.
Mexico’s Exchange Commission says that as of Tuesday, the government will begin a daily auction of $200 million whenever the peso falls at least 1.5 per cent from the previous day.
The idea is to provide liquidity to a currency market that has been volatile in recent weeks. Experts attribute the instability to fears that investment in Mexico could slide in coming years in the face of lower oil prices and the possible flight of dollars away from Mexican debt toward higher interest rates elsewhere.
The commission is composed of the Central Bank and Treasury Department.