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MADRID (Euronews) – Mexico may intervene to restore order if volatility in currency markets becomes “extreme”, Central Bank of Mexico Governor Victoria Rodriguez said.
The governor’s comments come as the Mexican peso has experienced wild swings in recent weeks, contributing to global losses. However, Rodriguez stopped short of promising intervention.
Possible intervention mechanisms include a $30 billion currency hedging program that could be implemented by the foreign exchange committee, led by a group of senior finance officials including her.
However, monetary flexibility remains one of the pillars of Mexico’s economic system, so the bank will not target any specific exchange rate.
“The Bank of Mexico will be very attentive to the developments in our markets and the possibility that they will show atypical behavior or extreme volatility. If anything happens, it can certainly take the necessary measures to reestablish their behavior in an orderly manner,” he said.
Any such intervention could be done by the bank alone or in coordination with other entities such as the foreign exchange board.
Factors that have contributed to the peso’s recent moves include wars in the Middle East, delays in the Fed’s rate cuts, and “special factors” that the governor did not want to explicitly mention. Mexico’s recent elections.
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