MEXICO CITY (Reuters) - The Mexican peso rallied on Friday to its strongest level since the day following the U.S. presidential election after U.S. Secretary of Commerce Wilbur Ross said that a new mechanism should be created to stabilize the exchange rate.
The peso
Mexico's central bank, which has hiked interest rates by 325 basis points since last year, recently announced plans to offer up to $20 billion in currency hedges to shore up the peso. The first auction of up to $1 billion is slated for Monday.
Central Bank governor Agustin Carstens denied a Bloomberg story this week suggesting that Banco de Mexico was mulling seeking a swap line with the U.S. Federal Reserve to boost liquidity.
Speaking on CNBC, Ross also said that a sensible trade deal with Mexico will help the battered currency, and that fears surrounding the North America Free Trade Agreement (NAFTA) had pummeled the peso.
Trump has threatened to pull the United States out of the trade pact with Mexico and Canada and slap a hefty tax on imports to the United States from Mexico to pay for a border wall.
The currency weakened nearly 17 percent after the U.S. election to a historic low on Jan. 11.