Mexico’s Central Bank Props Up Peso as Oil Plunge Hits Currency

Mexico’s central bank sold dollars to bolster the peso for the first time in more than two years, as officials try to curb volatility in the currency following an 8.2 percent slide in the past month. The Bank of Mexico sold $200 million today at an average price of 14.7544 pesos each, according to a website posting. The auction, conducted under procedures disclosed earlier this week, took place after the market exchange rate weakened by more than 1.5 percent from yesterday’s official price. The market closed today at 14.7772 pesos per dollar, the weakest since March 2009, according to data compiled by Bloomberg. The peso, the most-traded emerging-market currency, has weakened as plunging oil prices damped speculation that a projected energy boom in the country would attract foreign investment and spur economic growth. The slide has upended bets made earlier in the year on peso-denominated bonds by money managers including Pacific Investment Management Co. and BlackRock. “At the end of the day, the objective is to provide liquidity,” Mario Copca, a currency and fixed-income strategist in Mexico City at Metanalisis SA, said in a telephone interview. “The volatility may continue, not so much because of the auction, but because the behavior of oil prices.” The central bank’s intervention was its first since an auction held in July 2012. To contact the reporter on this story: Ben Bain in Mexico City at bbain2@bloomberg.net