Mexico's reserves down 11 pct after dollar sales
MEXICO CITY, Oct 14 (Reuters) - Mexico's foreign reserves, buoyed to record levels in recent years by oil exports, dropped nearly 11 percent last week as the central bank sold dollars to defend a plummeting peso.
As the widening global credit crisis sent markets around the world into a tailspin last week, Mexico's central bank auctioned $8.9 billion in foreign reserves in an aggressive attempt to shore up the peso MEX01 MXN=.
Foreign reserves stood at $75.12 billion at the end of the week, the central bank said in a statement on Tuesday.
The foreign exchange intervention failed to halt the slump in the peso, which ended the week with a 15 percent loss.
As well as discretionary forays in the exchange market last week, the central bank launched a program to auction $400 million daily whenever the peso has lost at least 2 percent against the dollar in the previous day. The program is a way of defending the peso in case of a sharp daily loss.
Mexico last sold dollars in large amounts to support the peso during the Russian financial crisis of 1998.
Mexico is the world's 10th largest oil exporter, and revenues from crude sales are a key source of foreign reserves.
The peso has regained 5 percent this week on expectations that trillions of dollars in bailouts by governments around the world will pull the banking system back from the brink of collapse. (Reporting by Noel Randewich; Editing by Leslie Adler)
