Mexico Needs New Peso-Saving Tools as Dollar Sales Sap Reserves
- Analysts agree central bank can’t afford to spend safety net
- Options include swaps, IMF credit extension, more rate hikes
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Mexico’s central bank, struggling to lift the peso from its record lows, is getting backed into a corner after spending $2 billion last week with little effect.
Recent dollar sales aren’t helping boost the currency, foreign reserves are faltering and economists expect policy makers to raise interest rates again in February after five hikes last year. While some analysts say Mexico could try dollar swaps or increasing its credit line with the International Monetary Fund, they warn against depleting reserves. That could undermine investors’ confidence and intensify the market selloff.