The Commission of Changes will be two new auctions of funding in dollars for 11,000 million that will be offered in two sections, 24 and 29 June. This is to ensure dollar liquidity to the market and renew the maturity of the operations held in April.
The resources will be auctioned among financial institutions will charge to the swap lines opened up between the Bank of Mexico and the Federal Reserve of the united States, and therefore do not have the cost to the reserves in us dollars, do not compromise public finances.
In a statement, the Commission of Changes, integrated by Banco de Mexico and the ministry of Finance, said that the auction tomorrow, Wednesday, June 24, will be for 7,000 million dollars.
Announced that it is scheduled another one for next Monday, June 29, where they will offer credits for 4,000 million dollars. Both will have a maturity of 84 days.
The line swap, which is where you will get the central bank of the dollar at auction, is the mechanism of temporary exchange of currencies established with the U.s. Federal Reserve and 14 central banks, which allows the institutes monetary dispose of a foreign currency to ensure liquidity in the currency of each signatory. In the case of mexico, last march 20 signed a temporary agreement to guarantee an exchange for the equivalent of 60,000 million dollars.
According to the Director of Economic and Financial Analysis of Bank-Based, Gabriela Siller, the Commission announcement of Changes helped that the mexican peso will appreciate in 0.55%, or 12.4 cents in respect of the closing of the previous day, trading around 22.51 pesos per dollar.
He commented further that the announcement itself “attenuated the expectation of a cut in the interest rate, scheduled for this Thursday at the meeting of monetary of the Bank of Mexico”.
That is to say, reduce the depreciation you could present the weight after the cut of 50 basis points as the one that is waiting for the market, he said.
Economic fundamentals anchor weight value
In the statement, the Commission of Changes stressed that “the anchorage value of the national currency will continue to procured mainly through the preservation of strong fundamentals”.
He stressed that “the Commission of Changes will continue to evaluate the conditions of operation of the foreign exchange market and in case of be necessary to take additional measures”.
The announcement of the Commission broke with a period of 76 days of non-intervention in the foreign exchange market from auction referenced in the line swap.
Up to now, and by the instruction of the Commission Changes, the central bank has conducted two auctions of dollars referenced in the swap lines with the Fed, in the days of the 1 and 6 April. In both years, placed 6,590 million $ 10,000 million offered.
This means that the mexican authorities may have still 53,410 million dollars for auction in case of need the conditions of the market, without these interventions generate a cost to the booking.
The precedent earlier when we used a similar mechanism to stabilize the market, occurred between 2007 and 2010. At that time it was in effect a swap arrangement with the Fed by 30,000 million dollars.
It was up to the 21st day of April, 2009, when the Commission of Changes determined to take 3,221 million dollars to auction off usd financing between credit institutions.