Mexico Central Bank Governor Agustin Carstens expects a “major correction” in the value of the country’s currency, the Wall Street Journal reported him as saying on Sunday.
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“My sense is that there has been some overreaction in particular in the exchange rate,” the Journal quoted Carstens as saying.
“Through time that pressure tends to disappear,” he said. “That can give place for a major correction, in the case of Mexico for example, which is something I would be expecting.”
Mexico’s peso hit a record low against the dollar on Thursday. The central bank hiked borrowing costs in December for the first time in seven years in a bid to stem weakening in the peso after the Federal Reserve lifted U.S. interest rates.
In a separate interview at the weekend, Carstens told Bloomberg that it is “essential” that Mexico matches the U.S. Federal Reserve on monetary policy, and that the question is whether to act before or after the United States.
“Following the Fed is essential,” Bloomberg quoted Carstens as saying.
“Whether the decision is taken before or after will depend a bit on other intervening factors that we can see at the moment we make our decisions.” (Reporting by Christine Murray; Editing by Sandra Maler)