Mexico’s central bank said on Monday that it will start a dollar auction program on Tuesday to help cushion the peso, which has seen a sharp slump.
The central bank said in a statement that it will offer $200 million a day at an auction that would be triggered whenever the peso has shed more than 1.5 percent from the previous session’s fix rate.
The latest move by the central bank seeks to slow the declining value of the peso that lost 5% of its value since mid-November.
“The Bank of Mexico will offer daily $200m via auctions at a minimum exchange rate equivalent to the FIX exchange rate determined on the previous working day according to the Bank of Mexico provisions, plus 1.5 per cent,” the statement said.
The bank noted that it has used this plan successfully in the past to boost the value of the peso during times of volatility.