No More Dollars in Mexico

The Exchange Commission announced its suspension

Yesterday, the Mexican Exchange Commission announced the suspension of the daily dollars auction system, mechanism established since 2008 and ratified in November 2011 to curb volatility in the foreign exchange market, due to the strong appreciation of the Mexican peso so far this year.

"It has been decided to suspend these daily auctions of dollars as of April 9, 2013,"said in a statement the Exchange Commission, which is made up by the Central Bank of Mexico and Finance Ministry officials.

So far this year the Mexican peso registered a 4.93% appreciation, and was sold today at 12.14 pesos per dollar in interbank operations. Back on January 2, 1013, it was exchanged at 12.77 pesos per dollar.

The highest exchange rate of the Mexican peso against the dollar in the past three years was recorded back in June of 2012 when it sold at 14.35 pesos per dollar.

The Exchange Commission explained that the system was introduced as a preventive measure to provide market liquidity if necessary, "given the volatility and uncertainty prevailing in the financial markets by the end of 2011."

The Mexican Government established this mechanism of the sale of dollars as a result of the global financial crisis that erupted in 2008.

The auction of dollars was established to curb pressures and speculation against the peso, reduce exchange-rate uncertainty and lack of liquidity, and avoid the volatility was transmitted to other macroeconomic variables, mainly inflation.

Editorial@sandiegored.com

Omar.Martinez@sandiegored.com

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