Mexico's peso strengthened against the dollar

Mexico's peso strengthened against the dollar Friday as the expectedly large job loss last month put pressure on the U.S.. currency.   The peso was quoted in Mexico closing at MXN15.2320 to the dollar, after settling Thursday at MXN15.3945.   A Mexico City currency trader said the peso started to gain early in the day following the U.S. employment report, which showed a decline of 651,000 jobs last month.   February's big job loss, which pushed unemployment up to 8.1%, bodes poorly for both the U.S. and Mexican economies, and stocks fell on both sides of the border.   But the peso took advantage, recouping ground lost the previous session in another global bout of risk aversion.   The peso also is expected to find some support in adjustments to be made starting Monday in the Bank of Mexico's daily dollar auctions.   The central bank will auction $100 million each day, and reduce to $300 million from $400 million the amount it sells only when the peso is 2% weaker from the previous session. The central bank also keeps open the option of unscheduled direct interventions.   "We believe that this could have a significant impact in the USD/MXN market having, in our view, a much lower probability of reaching levels above 16 pesos per dollar in the medium-term, despite the high degree of global markets risk aversion," UBS Pactual said in a report.   The currency trader said the modified auctions should be positive for peso as it "gives the market more certainty that the Bank of Mexico doesn't want to see the currency getting any weaker."   The weakening currency, which reached a record intraday low near MXN15.50 on Monday, has limited the central bank's ability to cut interest rates in the face of the economic downturn, because of the passthrough effect on consumer prices.   Citigroup unit Banamex welcomed the change in the auctions, having argued that the predictability of the central bank actions in the exchange market encouraged participants to take long dollar positions, since the risk was one-sided in their favor.