Mexican President Felipe Calderon on Wednesday proposed a 53-billion-peso ($4.3-billion) emergency plan to boost infrastructure spending after the Central Bank moved to prop up the peso.

The plan "is not a financial rescue, but will focus on driving internal motors to boost the Mexican economy," Calderon told journalists at his Mexico City residence.

He warned that the country faced a drop in exports, investment and tourists as a result of the crisis set off in its northern neighbour.

The plan, which still needs to pass through Congress, is based on "growth in public spending, particularly on infrastructure," Calderon said.

It includes the construction of a new refinery for state oil company Pemex, a support program for small- and medium-sized companies and a loosening of regulations to promote investment.

Peso plunges

The Mexican peso plunged on Wednesday to a record low, but rose again after the Treasury Department announced an extraordinary auction of $2.5-billion.

The peso changed hands at 12.45 to the dollar in late trading in Mexico City ? after hitting a record low of 13.65 to the dollar earlier ? compared with 12.30 the previous day and 11.93 on Monday.

The Exchange Commission announced the auction "in view of the conditions of uncertainty and lack of liquidity in financial markets," a Treasury statement said.

Mexico's central bank sold $998-million in the auction and the rest would be sold on Thursday, Treasury Secretary Agustin Carsten told a news conference.

From Thursday and until further notice, the Bank of Mexico will also auction off $400-million daily if the minimum exchange rate is two percent more than the previous working day, the Treasury statement said.

Last Friday, Mexico's international reserves stood at $84.1-billion.

Stability to the market

"It's positive because it will give stability to the Mexican exchange market, but it's not definitive because the dynamic will be determined by the volatility of international markets," said Octavio Gutierrez, analyst at BBVA Bancomer bank.

After hovering below 11 pesos to the dollar for the past year, the peso began to depreciate significantly on September 29.

The Mexican stock exchange then registered its biggest fall in eight years, following the rejection by the US Congress of a first financial rescue plan.

The Exchange Commission said it would watch market conditions and take the necessary legal measures to reestablish normal operations when appropriate.

The Mexico stock exchange closed 0.99 percent down Wednesday, by 205.77 points, at 20 678.97.

Mexico's economy, closely tied to the United States, had suffered few bumps from the global crisis until the peso's fall.