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Mexico increases currency hedge auctions to shore up weak peso

Xinhua,December 27, 2017 Adjust font size:

MEXICO CITY, Dec. 26 (Xinhua) -- Mexico's central bank on Tuesday said it was increasing its currency hedge auctions in a bid to strengthen the battered peso.

The bank's Exchange Commission said it instructed the sale of an additional 500 million U.S. dollars in foreign exchange hedges to counter the "high volatility" affecting the country's currency peso.

"In recent days, the foreign exchange market in our country has registered episodes of high volatility," the commission said in a statement, referring to the peso's fall against the dollar in the wake of uncertainty surrounding the renegotiation of the North American Free Trade Agreement (NAFTA) and the potential impact of U.S. tax reforms.

Mexico's main trade agreement with North American neighbors Canada and the United States is being renegotiated on the insistence of the White House, which wants to lure back business and jobs lost to Mexico.

The tax reforms, which U.S. President Donald Trump signed into law on Friday, substantially lower the corporate tax rate in the United States, sparking fears in Mexico it might divert investment.

Mexico's currency market was volatile these days, with the peso dropping to 19.72 against the dollar in trading Friday, the biggest weekly drop since Trump won the U.S. presidential elections in November 2016. Enditem