ACAPULCO, Mexico, April 26 Mexico could
re-introduce auctions of dollar 'put' options as a measure to
stem peso gains although this is not planned at the moment, Bank
of Mexico Governor Agustin Carstens said at a news conference on
Mexico has absorbed $160 billion in new foreign investment
in its financial markets in the last three years, pushing stocks
and bonds to record highs.
The peso has gained almost 6 percent this year
despite an interest rate cut in March. Mexico has suspended
dollar auctions on days of sharp peso losses and analysts have
said a next step could be re-starting option auctions.
"That is a mechanism that we could use in future," Carstens
told reporters on the sidelines of a banking conference, after
the central bank left interest rates at 4 percent.
"I am not anticipating that, far from it, but certainly that
is one of the instruments we have used in the past."
Under the program, the Banco de Mexico auctions the right to
sell dollars back to the central bank. If the peso appreciates
strongly, a bank may exercise its option and it will get more
pesos for its dollars than it would on the floating peso market.
Carstens firmly ruled out capital controls to tame foreign
investment inflows, as Brazil has done, and said Mexico was far
from a reverse of flows. He said earlier on Friday the peso was
still undervalued and would likely tend to appreciate further.