MEXICO CITY (Reuters) - Mexican President Andres Manuel Lopez Obrador said on Thursday the market should determine the foreign exchange rate of the peso and that he was not in favor of “artificial” interventions to prop up the currency.
Battered by global market turmoil over a crude price war and the coronavirus spread, the peso MXN= hit fresh all-time lows against the dollar on Thursday, weakening nearly 7% in early trading to 22.864 per dollar. It later trimmed some losses.
Lopez Obrador said Mexico had the reserves to cope with any crisis, and that if any changes to the budget became necessary, the government would have to “tighten its belt.”
“From our perspective, we shouldn’t intervene so that our currency is artificially strengthened,” Lopez Obrador told a regular government news conference, noting that Mexico’s central bank should decide how to ensure stability.
Mexico has beefed up a program of currency hedge auctions to support the peso, though only $460 million of $2 billion offered on Thursday was assigned, the central bank said.
The peso has lost more than 15% of its value against the dollar since the start of the year. At 2.45 p.m. local time it was trading around the 21.9 per dollar level.
Mexican Finance Minister Arturo Herrera told Reuters late on Wednesday that Mexican policymakers needed to implement economic measures to minimize the expected economic headwinds caused by the spread of the coronavirus.
Reporting by Dave Graham and Adriana Barrera; Additional reporting by Noe Torres and Drazen Jorgic; Editing by Chizu Nomiyama and Tom Brown