Despite complaints over the harsh austerity it imposes, Mexico's congress has approved a $20 billion U.S. aid package that could help to halt the precipitous slide of the economy.
President Ernesto Zedillo said he would await congressional action on the package before announcing a new economic plan. Delays in the plan had repeatedly sent markets plunging.On Tuesday, the Mexican peso fell to a record low close for a third straight day, and the central bank was forced for a third straight week to abandon its auction of dollar-denominated bonds.
Opposition party deputies voted against the loan package in the lower house of congress, the Chamber of Deputies, on the ground that the high interest rates and spending cuts it imposes will do more harm than good.
Many also say its tough austerity conditions gives the United States too much control over Mexico's economy.
But Jorge Cejudo Diaz of the governing Institutional Revolutionary Party urged lawmakers to "reject false solutions, evasions of reality and the risk of fearful and unworkable measures" such as a debt moratorium to solve the economic crisis.
The peso ended at 6.795 to the dollar - a new low close for the third straight day. It closed at 6.575 Monday after briefly falling below seven to the dollar earlier that day.
The peso has lost almost half its value against the dollar since Dec. 20 - and even more against other currencies such as the German mark and Japanese yen.
Analysts said the dollar has been hurt by concern that funding for the Mexican plan might drain reserves for backing the U.S. currency. The peso, in turn, has been hurt by the fall of the dollar. Traders have sold pesos to buy dollars they can exchange for stronger marks or yen.
Mexico's markets have been unsettled for at least two weeks over the government's failure to come out with new economic projections for the year.