Mexico's Peso Posts Back-to-Back Advance as Reserves Increaseby
Central bank says reserves climb to $176 billion last week
Banxico’s move has worked `marvelously:' Bank of Nova Scotia
Mexico’s peso posted a back-to-back gain as data showed international reserves rose for a second week, easing concern the central bank could run out of dollars to sell as part of a new intervention program.
The currency rose as much as 1.4 percent and traded at 17.9454 per dollar at 12:09 p.m. in Mexico City after Banxico, as the central bank is known, said reserves rose to $176 billion after it refrained from intervening in the currency market last week.
The peso’s gain was the biggest jump since the Finance Ministry and Banxico on Feb. 17 announced three measures to reduce volatility of the world’s most-traded emerging-market currency. The measures included a surprise interest rate increase, budget cuts and a new intervention system in which the bank can sell dollars in a discretionary manner, instead of in a public auction like it had done since late 2014.
“Banxico’s move has worked marvelously,” Eduardo Suarez, a strategist for Latin America at Bank of Nova Scotia, said in an e-mail. “It’s good news that reserves are rising, it eliminates the fear that the bank will ‘run out of ammo.”’
The peso also got a boost from a rally in U.S. equities on Tuesday, fueled by data suggesting that American consumers can still power the world’s largest economy, he said.