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May 2003 - July 2008. Mechanism to slow the pace of international reserve accumulation

The Foreign Exchange Commission, composed of officials from the Ministry of Finance and Banco de México and responsible for Mexico's foreign exchange policy) issued two separate press releases, on March 7, 2003 and March 20, 2003. The releases announced and explained the establishment of an automatic mechanism to slow the pace of international reserve accumulation. A significant increase in international reserves up to then led to the decision to sell a fraction of accumulated reserves directly in the foreign exchange market (modifications to the mechanism were announced on March 12, 2004). A defining characteristic of this mechanism is that it should operate independently from the exchange rate level and the currency's appreciation or depreciation trend.

Under this mechanism, Banco de México is committed to selling US dollars directly in the foreign exchange market. Also, the amount of dollars offered must be announced through a quarterly press release, The total amount to be offered in each period is determined by the accumulation of reserves during previous quarters, net of sales carried out through the same mechanism, as stipulated in circular 18/2003 and its modifications announced in circular 18/2003 Bis.

The total amount of dollars offered each period is sold by Banco de México in daily auctions that start at predetermined times. Participation in these auctions is limited to local credit institutions.

On July 25, 2008, the Foreign Exchange Commission, announced through a press release(and through circular 32/2008), hat it would suspend the mechanism, as of August 1, 2008 and until further notice.