Peso falls against dollar

Mexico's peso tumbled and the stockmarket dropped 7 per cent yesterday, despite the central bank's actions to stabilise the economy.

The bank has been auctioning off reserves since the peso hit a record low of 14 to the US dollar this month, after trading in early August at under 10 to the dollar.

It auctioned off another US$400 million ($676 million) at an average rate of 13.4 pesos to the dollar. But the auction did little to halt the peso's fall.

It was trading at 13.6 to the dollar after running at about 13.2 hours earlier. The Mexican peso has been among the hardest hit by the economic crisis, and yesterday's weakening was likely to worsen derivative losses.