LatinNews Daily - 02 March 2021

In brief: Mexico’s Banxico announces more dollar auctions

* Mexico’s central bank (Banxico) has announced that it will be holding two new US dollar auctions to in a bid to help ensure an adequate supply of dollars to Mexico’s banking system and to stabilise the domestic exchange rate. The value of the Mexican peso has fluctuated in recent weeks as the global economy continues to suffer the effects of the coronavirus (Covid-19) pandemic. Banxico has been trying to manage this volatility through various dollar auctions (eight since March 2020). A Banxico statement said that it would auction US$750m each day on 3 March and 8 March. Banxico noted the funds come from the US$60bn currency swap line that Banxico agreed with the US Federal Reserve in March 2020 to help ensure the liquidity of Mexico’s financial system and mitigate the economic crisis produced by the pandemic. The statement emphasised that the aim of the operation is to “anchor the value of the national currency and at the same time maintain solid economic fundamentals”.

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