Mexican central banker says Trump’s tweets modified peso strategy

4/5/2017 Reuters

380px-Agustin_CarstensMexico’s central bank chief said on Wednesday the bank altered course on how to protect the peso after a couple of tweets by U.S. President Donald Trump in early January pummeled the local currency to near historic lows and wiped out the effect of a $2 billion currency intervention.

The Banco de Mexico in early January had sold dollars to fight off the peso’s nosedive to record lows amid fears the protectionist policy pronouncements of then President-elect Trump could further hammer Latin America’s second-largest economy.

“I’ll say it like this, in simple terms: with two tweets from you know who, the effect (of that intervention) vanished,” Mexican Central Bank chief Agustin Carstens said on Wednesday.

“It was precisely then we thought that instead of using hard currency like dollars, it would be better to move to a scheme in which there was the possibility of offering hedges” without having to eat into Mexico’s currency reserves, Carstens added.

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