MEXICO CITY, March 20 (Reuters) - Mexico’s peso is undervalued, Mexican central bank governor Agustin Carstens said in an interview published on Friday.
“The peso today is undervalued,” Carstens told newspaper El Universal. “I think it has been subject to an over-reaction thanks to the uncertainty that possible changes in U.S. monetary policy have caused.”
The Mexican currency has fallen to record lows against the dollar this month, dragged down by a decline in oil prices and expectations of an imminent interest rate hike by the U.S. Federal Reserve.
Many analysts fear rising U.S. interest rates could reverse a tide of investment into emerging market assets seeking riskier, high-yielding assets.
Carstens on Thursday said the Mexican central bank may hike its benchmark interest rate if a normalization of U.S. monetary policy puts at risk the Mexican goal of keeping inflation at around 3 percent. (Reporting by Alexandra Alper and Veronica Gomez; Editing by Dave Graham)