The Mexican peso topples as Trump closes in on the White House.
MEXICO CITY, MEXICO (NOVEMBER 09, 2016) (REUTERS) – Mexico’s peso plunged to its lowest-ever levels on Tuesday (November 08) night as U.S. Republican Donald Trump led in the key battleground state of Florida and had an edge in a clutch of other states, driving investors to contemplate that Trump could likely be the next U.S. president.
Concerns of a Trump victory weighed heavily on the peso for months on his threats to rip up a free trade agreement with Mexico and tax money sent home by migrants to pay for building a wall on the southern U.S. border.
The peso MXN=D2 weakened by more than 13 percent after-market trading for Mexico and in Wednesday (November 09) trading in Asia, breaking past 20 pesos per dollar – its biggest intraday fall in at least 19 years.
“This situation is very concerning. I just heard the bad news, the terrible news that Trump won, I don’t know if it is official or not but it will affect Mexico more than other countries,” said Mexican student, Hector Guerrero.
Trump’s vows to build a wall along the US-Mexican border and deport millions of undocumented migrants has rattled the Mexican peso for months.
This Spanish tourist, Javier, is now concerned about Trump at the helm of the US government.
“The affect on the exchange rate with the dollar, but what worries me is the general situation of having a man like Trump in government. I think it is something unbelievable that has happened, but it has happened so now how do we react to barbarity of this man,” he added.
A Trump-inspired peso tumble could push Mexico’s central bank to raise interest rates or directly intervene in forex markets to stem the bleed.
A deep slump in the peso could stoke inflation, but it would also help compensate exporters, who could face new tariffs under a Trump presidency.