Mexico is not targeting a particular peso level against the U.S. dollar, only a liquid market, Finance Minister Luis Videgaray said on Saturday August 22nd, a day after the Mexican currency hit a fresh low against the greenback.
Separately, the minister said the government aimed to send a plan to Congress in the coming days to create special economic areas in parts of the country that have been left behind economically, focusing on Mexico’s poorer south.
In a speech to lawmakers from the ruling Institutional Revolutionary Party, or PRI, Videgaray said the key objective for policymakers was to ensure that foreign exchange market conditions did not end up hurting consumers’ spending power.
Policymakers are watching for signs the peso decline could stoke price pressures, but inflation is tame at the moment, touching a record low of 2.74 percent in July.
Still, the peso has fallen by more than 15 percent against the dollar this year, and Mexico last month stepped up intervention to support the currency, with policymakers saying they could take further steps if necessary.
Videgaray said it was crucial to ensure the currency market remained “highly liquid”, which is why authorities had acted.
“Not with the aim of defending a particular Mexican peso level against the dollar. This would be a throwback to another era when the exchange rate was fixed,” he said.
“Today’s interventions in the exchange market are to ensure the liquidity of the market,” he continued.
It was also crucial the government remained fiscally responsible and upheld central bank autonomy, he said.
Congress resumes on Sept. 1, and Videgaray said President Enrique Pena Nieto would soon send lawmakers an initiative to mandate creation of the special economic areas.
Such a plan could comprise providing the less-developed zones with fiscal benefits, a special customs regime and a “flexible regulatory framework,” Videgaray said. It was also crucial to provide them with better infrastructure, he added.
Three southern states of notable importance were Chiapas, Guerrero and Oaxaca, Videgaray said.
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