Mexico's Peso Falls After Carstens Says Interventions to Be Rare

  • Currency heads to first drop in 4 days, region's biggest slide
  • Banxico governor speaks at press conference in Mexico City

Mexico’s peso fell for the first time in four days after central bank Governor Agustin Carstens indicated that policy makers’ interventions to bolster the peso will be rare.

The currency slipped 0.6 percent to 17.9321 per dollar at 3:30 p.m. in Mexico City, the biggest decline in Latin America. The peso had advanced 2.5 percent this week through Wednesday.

Carstens told reporters in Mexico City that policy makers’ intervention will be in “very exceptional” circumstances with a focus of anchoring the exchange rate to Mexico’s fundamentals. That comes two weeks after Mexico’s central bank known as Banxico jolted markets by replacing its long-standing rules-based daily dollar auctions for discretionary sales directly to banks.

“The comments by Carstens may have weakened the expected threshold that could spur Banxico to act,” Juan Carlos Alderete, a strategist at Grupo Financiero Banorte SAB in Mexico City, said by e-mail. “That doesn’t mean they won’t act again, but at the margin it raises the bar for the circumstances needed to pull the trigger again."

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