Mexico’s central bank sold $400 million in auctions to prop up the peso, which tumbled to a record low on speculation the Federal Reserve will raise interest rates next week.
The peso dropped 1.1 percent to 17.3763 per dollar at 11:01 a.m. in New York, after earlier weakening to 17.4381 pesos, the lowest level since its redenomination in 1993.
Mexico’s peso, which is the most-traded emerging-market currency in the world, followed a selloff in developing nations on concern higher U.S. borrowing costs will curb the appeal of riskier assets. Traders are pricing in a 76 percent chance that the Fed will raise rates at its Dec. 16 meeting after data showed growth in retail sales and producer prices in the world’s largest economy.
“This week’s move in emerging markets has been violent,” said Win Thin, the head of emerging-markets strategy at Brown Brothers Harriman & Co. in New York. “I’d expect a move past 17.50, towards 18” for the Mexican peso if the Fed raises rates, he said.