Mexican peso stabilizes after record drop
by Traci Carl on Oct. 24, 2008, under Edge, SpecialMEXICO CITY – Mexico’s peso was stabilizing Friday at 13.5 to the dollar after dropping to a record low.
Mexico’s central bank offered three separate auctions of US$400 million each during its daily foreign reserves auction, but didn’t get enough bids for any of them.
The bank offers US$400 million at auction each day at the previous day’s closing price plus 2 percent, drawing bids only when the peso’s losses exceed the difference.
On Thursday, the bank struggled to sell off more than US$1 billion in reserves in four different auctions as the peso hit a record low of more than 14 to the dollar.
Mexico’s central bank has sold more than US$13 billion, or about 15 percent of its foreign currency reserves, to boost the sagging peso since it first broke the 14-to-the-dollar mark on Oct. 8.
Mexico’s foreign reserves stood at US$78.7 billion on Tuesday, the latest figure available.
The peso’s tumble and worries about global recession have taken a toll on the Mexican stock market. The benchmark IPC index fell 4.6 percent to close at 16,979 Friday.
Currencies around the world have fallen with the global economic crisis. But the peso has been among the hardest hit. Many U.S. companies heavily invested in Mexico are withdrawing assets to cover their own losses at home.
