Change plans for the Peso after tweets from Trump

Mexico's central bank chief said on Wednesday the bank altered course on how to protect the peso after a couple of tweets by U.S. President Donald Trump in early January pummeled the local currency to near historic lows and wiped out the effect of a $2 billion currency intervention.

The Banco de Mexico in early January had sold dollars to fight off the peso's nosedive to record lows amid fears the protectionist policy pronouncements of then President-elect Trump could further hammer Latin America's second-largest economy.

The bank earlier on Wednesday sold its entire offer of $200 million in foreign exchange hedges in an auction in which demand far outstripped supply, reflecting the appetite for the program aimed at supporting the country's peso currency.

Agustin Carstens said that the peso, which fell to a low of nearly 22 per dollar following the U.S. elections in November but has since recouped most of those losses, is still undervalued and has room to appreciate.

Future interest rate decisions by the U.S. Federal Reserve should not cause further depreciation in the peso, Carstens added. Regarding monetary policy, Carstens also said that depending on the evolution of inflation expectations, the Banco de Mexico may be able to stop following Fed decisions in tandem.