UPDATE 1-Mexico keeps options open to support 'undervalued' peso-Carstens
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By Jean Luis Arce
ACAPULCO, Mexico, March 20 (Reuters) - Mexico's Central Bank Governor Agustin Carstens said on Friday he did not rule out discretionary intervention to support the Mexican peso, describing the currency as "undervalued."
Mexico's peso has fallen this month to historic lows against the dollar, hammered by a slump in oil prices and fears that an imminent hike in interest rates by the U.S. Federal Reserve may spur capital flight from emerging markets.
The bank has so far launched two dollar auction programs to boost liquidity and stabilize the foreign exchange market, but could take further action, Carstens said.
"In an instance of highly erratic movements of a speculative nature, we do not rule out the possibility of a discretionary intervention ... but it would really be an extraordinary case," Carstens said at a banking conference in Acapulco.
In an interview with newspaper El Universal published on Friday, Carstens said the peso was "undervalued" due to market over-reaction to concern over shifts in U.S. monetary policy. .
The peso firmed 1.8 percent on Friday morning to below 15.00 per dollar .
Speaking on local radio, Carstens said the marked decline in the peso had done little to stoke price pressures, adding that inflation would be contained in the medium term. Continuación...