UPDATE 2-Mexico central bank intervenes in forex market

Fri Feb 20, 2009 6:39pm EST

(Recasts with central bank confirmation)

MEXICO CITY Feb 20 (Reuters) - Mexico's central bank intervened in the foreign exchange market on Friday, offering dollars directly to dealers after the peso hit a record low against the dollar.

Mexico's central bank said in a statement the sales were aimed at improving liquidity in the market. The peso hit a record low earlier in the day.

The bank did not say how many dollars it had sold in the operations, which traders reported hours before the bank's announcement.

The peso rallied as the bank offered dollars after it finished its regular dollar auctions at 1 p.m. (1900 GMT).

The peso had fallen more than 2 percent and traded as low as 14.9983 per dollar MEX01 on Friday, prompting the central bank to sell the maximum $400 million in two auctions under its daily dollar auction policy.

The currency rose following the interventions, but was still down 1.22 percent at 14.80 per dollar.

The bank began intervening on Feb. 4, selling dollars directly to banks in its first such direct sale in a decade.

Finance Minister Agustin Carstens said on Feb. 6 that the bank would continue to intervene when necessary to contain the volatility of the peso. (Reporting by Michael O'Boyle, Liz Salazar, Lorena Segura, Jason Lange and Robert Campbell; Editing by Leslie Adler)

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