Mexico’s peso depreciated after the nation’s currency commission said it was suspending daily dollar auctions designed to bolster the peso.
The currency fell as much as 0.3 percent today before paring its loss to 0.1 percent or 12.1852 per dollar at 3:38 p.m. in Mexico City. The peso earlier today touched 12.1316, the strongest level since August 2011. Its 5.3 percent gain against the dollar in 2013 is the best performance among the 16-most traded currencies tracked by Bloomberg.
Mexico’s currency commission, which includes officials from the Finance Ministry and central bank, said today that the central bank would no longer offer $400 million of its reserves daily starting tomorrow. The measure was put in place in November 2011 to curb volatility as the peso dropped 11.4 percent that year.
“It’s a natural step,” Roberto Torres, the head of peso trading at BNP Paribas SA, said by phone from New York. “That auction is not needed anymore.”
Mexico’s currency has jumped 15 percent, the most among major emerging-markets tracked by Bloomberg, since the commission said Nov. 29, 2011 that it would offer its reserves at a peso exchange rate at least 2 percent weaker than the previous day’s level, providing support for the tender.
“Conditions in the international and national financial markets indicate that exchange rate volatility has declined,” the currency commission said in a statement today.
Finance Minister Luis Videgaray said March 21 that the government will allow the peso to float freely and Deputy Finance Minister Fernando Aportela said in a March 17 interview Mexico wasn’t planning measures to curb the peso’s advance.