(Bloomberg) -- Mexico’s central bank opened the door to intervening in the peso, an acknowledgment of the turmoil roiling the market after a post-election rout sent the currency tumbling to a 15-month low.

Banco de Mexico Governor Victoria Rodriguez told reporters Wednesday that there are tools available to restore market order, if needed. She blamed the volatility mostly on external factors, and insisted policymakers aren’t trying to defend a specific level for the currency.

“We will be attentive to guarantee the proper operation of the financial markets,” she said in her first comments on the decline that wiped out almost 10% of the peso’s value this month. The bank could act if the peso shows “atypical behavior or extreme volatility.”  

Her comments failed to stem declines in the peso, which weakened about 1% on the day, one of the worst performers in emerging markets. Barclays Plc warned intervention, if it comes, may be ineffective anyway.

It was another day of tumult for one of the world’s most-traded emerging-market currencies, which has been severely bruised by speculation that the dominant showing for the Morena party in national elections June 2 may make it easier to push through judicial reforms and other changes that could expand the populist party’s control. One-month implied volatility in the peso hit its highest since late 2020 last week on concern about the potential loss of checks and balances.  

President-elect Claudia Sheinbaum hosted a news conference for a third straight day at which she was asked about the peso, and she once again failed to stop the bleeding with reassurances the economy is strong. Mexico had looked stable to investors ahead of the election, which she was expected to win.

“Everyone wants to continue investing in Mexico, foreigners, nationals,” she said. “The Mexican economy is solid” and the peso “will adjust,” she added.

In another bid to reassure investors, the Finance Ministry said it was prepaying $894 million of bonds due in April 2025 and would also refinance local debt coming due next year.

For her part, Rodriguez shied away from directly addressing the election’s effect on the peso, referring to “idiosyncratic factors” along with global issues such as war in the Middle East and the outlook for US interest rates.

The peso’s losses are coming at a pace similar to what was seen during the pandemic, Barclays strategist Erick Martinez wrote in a note, warning about the risks to financial stability. 

“If the exchange rate keeps moving at this speed, authorities will have to act sooner rather than later,” he wrote in the note. However, he added, any move by the central bank to support the peso is unlikely to change the general trajectory since the risks were coming from lawmakers’ plans. 

Rodriguez said policymakers could turn to a $30 billion hedging program, in which the central bank auctions derivatives to banks to help protect them from peso losses, to bolster the market.

In past episodes of global volatility, the central bank has occasionally directly intervened in the market, though that course of action has been rare.

The bank implemented a spot dollar auction program during the global financial crisis but in more recent bouts of instability, it relied on auctioning non-deliverable forwards. It created a hedge program in 2017 that wound down last year.

The president-elect said lawmakers would lead the process on discussing the judicial plan — which would allow direct election of Supreme Court justices — and other reforms proposed by President Andres Manuel Lopez Obrador, who backed Sheinbaum. The new congress will be seated in September, one month before Sheinbaum takes office.

Alfredo Puig, a trader at Vector Casa de Bolsa, doubted the central bank would intervene and said policymakers should cut interest rates later this month, as the market had expected before the recent volatility.

“Lowering rates would be a good sign, like showing muscle,” Puig said. “People trust the fundamentals, they just don’t trust the result of the reform of the judiciary.”

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