Mexican central bank Governor Agustin Carstens said the Peso’s weakness is “transitory” and the currency is likely to resume its upward trend, along with other Latin American currencies.
Carstens met with central bank chiefs from Latin America in Washington during the IMF/World Bank assemblies and said there was a consensus that the recent sell-off in the region’s assets would prove short- lived.
“We think that our currencies have been oversold, and it’s very probable there will be an important correction in the next days,” Carstens told reporters in Washington today.
The Mexican currency appreciated 3.9% against the dollar to 13.5600 on Sept. 23, after falling for 11 consecutive days as investors dumped emerging market assets on concern prospects for the global growth were worsening.
Carstens said the decline had nothing to do with Mexico itself, which has a solid fiscal position and a sound banking system.
The peso has dropped 13.5% since the end of July, the second-biggest fall of major Latin American currencies after the Brazilian Real. The peso is “clearly undervalued,” Carstens said in an interview.