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.