Financial Regulatory Forum

By Michael O’Boyle and Patrick Rucker

MEXICO CITY, April 6 (Reuters) – Mexico’s central bank could try to tap the brakes on a dogged appreciation in the peso before currency gains start to threaten the competitiveness of local exports.

The peso strengthened 6.0 percent in the first quarter to trade at its strongest in almost 1-1/2 years, thanks to a rebound in demand for Mexican exports from the country’s top trading partner the United States.

Mexico’s central bank has been buying U.S. dollars since March to build a war chest of reserves ahead of any possible volatility in global markets once the United States begins to raise interest rates. The program has also poured pesos into the market.

Countries like Brazil and Colombia have recently used similar tactics to help dilute the value of their currencies and some analysts are betting that Mexican policymakers could accelerate their dollar buying to slow the peso’s advance.

“The central bank will increase its mechanism to accumulate reserves, and this will undermine the peso’s momentum,” said Gabriel Casillas, an economist at JPMorgan in Mexico City.

HANOI, Jan 18 (Reuters) – Vietnam’s central bank said on Monday it would cut the compulsory reserves banks must keep on non-term foreign currency deposits and on those with terms of up to 12 months to 4 percent from 7 percent.

A central bank statement also said the compulsory reserves on foreign currency deposits with terms longer than 12 months would be cut to 2 percent from 3 percent.

The changes take effect on Feb. 1, the State Bank of Vietnam said.

The lower reserve requirements, the first sign of monetary easing this year by Vietnam’s central bank, means banks will have more dollars to put into circulation since they will have to park smaller amounts in accounts at the central bank.

By Helen Popper

BUENOS AIRES, Jan 8 (Reuters) – An Argentine judge blocked the president’s plan to use Central Bank reserves to pay public debt and ordered the bank chief’s reinstatement on Friday, deepening a dispute that has rattled financial markets.

Moments after a court ruled to reinstate former Central Bank President Martin Redrado, he returned to the bank, waving at television cameras. A day earlier, President Cristina Fernandez fired Redrado for opposing her debt plan.

Despite the court rulings, local media said an interim bank chief was taking steps to move $6.6 billion in foreign currency reserves to the treasury. “It’s like a science fiction movie,” a central bank employee told Reuters.