July 17 (Bloomberg) -- Mexico's central bank will refrain from selling dollars from August through October, the first time it won't make daily sales since beginning a program in 2003 to slow the growth of international reserves.

Banco de Mexico will halt the daily sales because its reserves haven't recovered since the government bought $12.4 billion from it last year to make foreign debt payments.

``The decline in the stock of reserves doesn't make it necessary for the bank to sell dollars,'' said Mario Correa, an economist at Bank of Nova Scotia's unit in Mexico City.

Mexico's central bank introduced the daily sale system four years ago to recycle into the foreign exchange market some of the dollars it's required by law to buy from state oil monopoly Petroleos Mexicanos. Foreign reserve growth has a cost for the central bank because it receives a lower interest rate on the reserves than it pays on the bonds it sells to keep the money supply in check.

The bank's reserves were $70 billion in the week ending July 13, down from $78 billion a year earlier. The amount of dollars Banco de Mexico sells on a daily basis has been declining since reaching a peak of $45 million in August to October last year. The bank has sold $21 million in the May to July period.

Mexico's peso rose 0.3 percent to 10.7470 per dollar today.

To contact the reporter on this story: Valerie Rota in Mexico City at vrota1@bloomberg.net.

Last Updated: July 17, 2007 17:55 EDT