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Mexico's peso extended gains to its highest level since the election of U.S. President Donald Trump on Wednesday, a day after the central bank said it would offer up to USD$20 billion in currency hedges.
In an interview with local news agency Notimex, Mexico's Central Bank Governor Agustin Carstens said the stronger peso, which gained 0.6 percent on Wednesday to trade at MX$19.89 wholesale currency exchange rate per greenback, reflected confidence in the hedge.
"The measure has been very successful," Carstens said, adding the hedge helps remove volatility from the foreign exchange market. Retail currency exchange rates stand at MX$20.35 per greenback.
Mexico's foreign exchange commission said the first auction of the new instruments will be on March 6 for up to USD$1 billion. While the measure does not prevent the Mexican peso to suffer from internal risks, it is expected to offset speculation against it in term of foreign investment.
