Mexico Central Bank Adds Bond-Buying Tool to Back Liquidity
Mexico's central bank published regulations allowing it to buy some local government securities to support money-market liquidity when needed. The bank may buy zero-coupon Cetes and floating-rate Bondes F in the secondary market when liquidity conditions require it, depending on liquidity forecasts and market conditions. The move is designed to strengthen policy implementation by allowing the central bank to manage liquidity more efficiently and support the orderly functioning of the money market.
➤ Mexico's central bank (Banxico) has introduced a new tool allowing it to purchase local government securities (Cetes and Bondes F) in the secondary market to manage money-market liquidity. ➤ This measure aims to enhance monetary policy implementation, especially during periods of high volatility or reduced foreign participation, and to maintain the overnight interbank interest rate within its target. ➤ The move comes amid concerns about Mexico's credit rating and aims to ensure orderly market functioning without altering the central bank's overall monetary policy stance.