February 17, 2016 / 4:55 PM / 3 years ago

CORRECTED-UPDATE 1-Mexico's central bank launches direct FX intervention plan - sources

(Corrects lead to show sells dollars, does not buy dollars)

By Miguel Gutierrez and Tomás Sarmiento

MEXICO CITY, Feb 17 (Reuters) - Mexico’s central bank intervened directly in the forex market to sell dollars as part of an aggressive new program, two central bank sources said on Wednesday, in a major policy shift to support the peso, which plunged to fresh lows in recent weeks.

One of the sources said the new program will be announced at a press conference at 11 a.m. local time (1700 GMT).

The move marks an unexpected break from Banco de Mexico’s general preference for rules-based intervention and is the first time since 2009 that it has opted for direct dollar sales.

The peso, which has been slammed by sinking oil prices, surged more than 3 percent in early Wednesday trading, after touching a new all-time low last week at 19.4480 per dollar.

The peso is currently down about 6.5 percent against the dollar year-to-date.

“We are calling the banks to ask them for prices directly and selling them dollars to the financial institutions that give us a price,” a central bank source told Reuters. “It is through phone calls to brokers that we are selling dollars to the market.”

Mexico is committed to a freely-floating exchange rate and usually refrains from opting for more direct forms of intervention used by other emerging market economies.

Last month Mexico’s currency commission, which is comprised of the central bank and the Finance Ministry, said it would maintain a daily dollar auction program that offered up to $400 million a day whenever the peso falls sharply. (Additional reporting by Elinor Comlay, writing by Alexandra Alper; editing by Simon Gardner, G Crosse)

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