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By Jean Luis Arce

ACAPULCO, Mexico, March 20 (Reuters) - Mexico's Central Bank Governor Agustin Carstens said on Friday he did not rule out discretionary intervention to support the Mexican peso, describing the currency as "undervalued."

Mexico's peso has fallen this month to historic lows against the dollar, hammered by a slump in oil prices and fears that an imminent hike in interest rates by the U.S. Federal Reserve may spur capital flight from emerging markets.

The bank has so far launched two dollar auction programs to boost liquidity and stabilize the foreign exchange market, but could take further action, Carstens said.

"In an instance of highly erratic movements of a speculative nature, we do not rule out the possibility of a discretionary intervention ... but it would really be an extraordinary case," Carstens said at a banking conference in Acapulco.

In an interview with newspaper El Universal published on Friday, Carstens said the peso was "undervalued" due to market over-reaction to concern over shifts in U.S. monetary policy. .

The peso firmed 1.8 percent on Friday morning to below 15.00 per dollar .

Speaking on local radio, Carstens said the marked decline in the peso had done little to stoke price pressures, adding that inflation would be contained in the medium term.

Mexican inflation has eased to the central bank's 3 percent target for the first time in nearly 9 years, supporting bets that the bank will leave interest rates at a record low in its upcoming interest rates decision next Thursday.

Speculation has swirled about whether Mexico's central bank would raise interest rates before the Fed, which is expected to move later this year. Analysts polled by Reuters are evenly split, and Carstens on Friday shed little new light on the subject.

"The main scenario would be ... that we wait for information [about the Fed's actions] but again, there could be foreseeable eventualities that might make it convenient to act at different moments," he said.

(Additional reporting by Tomas Sarmiento, writing by Alexandra Alper; Editing by Phil Berlowitz)